- Clearance rates are above 55% across all capitals except Brisbane.
- Sydney’s clearance rate was the best-performing, overtaking Adelaide.
- Unit clearance rates outperformed houses in Syd, Melb, Bris, and ACT.
Domain’s Auction Report for February 2023 shows that clearance rates across the combined capitals have increased to a twelve-month high of 64.8 per cent.
January is historically a quieter month with fewer homes on the market so the monthly lift in February was expected, Domain’s data revealed.
Looking across the country, Sydney’s clearance rate was the best-performing capital, overtaking Adelaide from its long reign at the top. The harbour city’s clearance rate is at its highest point since October 2021 and above 60 per cent for the first time in eleven months.
Melbourne saw a significant jump in its clearance rate to its best performance since March 2022.
Brisbane’s clearance rate jumped to 51.5 per cent in February, the city’s highest clearance rate since May 2022, however, continues to see a significant drop compared to this time last year.
Canberra’s clearance rate increased to the highest rate since October 2022 however it’s also seeing the most significant annual decline out of all the capital cities.
Auction volumes rise but trend lower
The report found that Auction volumes have risen for the first time since November across the combined capitals and combined regionals, but remain lower over the year. All capitals saw a monthly increase in auction activity, which aligns with the lift normally seen in February after the lull in January.
The proportion of properties across the combined capitals that were sold prior to auction day is at its highest point since April 2022. This shows that sellers are willing to accept offers prior to auction day due to weaker demand and uncertainty around future interest rate hikes.
TABLE 1. AUCTION PERFORMANCE FOR FEBRUARY 2023
Clearance rates by city
Sydney’s clearance rate is at its highest point since October 2021 and is above 60% for the first time in eleven months. Clearance rates are up annually for the first time since October 2021, an impressive feat given the downward trend in rates over 2022. It is the best-performing city out of the capitals.
Melbourne saw a significant jump in its clearance rate to its best performance since March 2022. They continue to trend lower annually but the rate of decline is at a six-month low.
Brisbane’s clearance rate jumped in February, the highest clearance rate since May 2022. However, it continues to see a significant annual drop and the weakest rate out of the capitals. This is driven by 2021’s strong property market and unusually high clearance rates. Brisbane is a less auction-centric market, so larger variations are expected.
Adelaide is no longer the best-performing auction market but still has a high clearance rate. This is the best rate since March 2022 but it remains lower annually.
Canberra’s clearance rate increased in February to the highest rate since October 2022. However, it is seeing the largest annual decline out of all the capital cities, highlighting the impacts of a weaker property market.
Vendors still nervous
Domain Chief of Research and Economics, Dr Nicola Powell said, “The improvement in clearance rates comes down to the seasonal post-January jump in auction listings after the school holiday lull.
“However, it’s still clear that homeowners are waiting for a more stable economic market before they list.
“We can also see that nervous vendors are willing to negotiate with the latest Domain data showing the proportion of properties sold before auction day at its highest level in almost a year,” she said.
Property influx predicted
Dr Powell stressed that, while it’s likely going to be a more subdued Autumn selling season, there is the risk that if vendors wait until later in the year to sell, an influx of properties may come onto the market, causing prices to fall.
She said, “At a time of declining property prices and worsening mortgage affordability, the performance of clearance rates can be a good indication of buyer confidence and the strength of the property market.
“Historically, clearance rates tend to seasonally bounce early in the year, and are often higher than the previous year closed. This is why it’s too early for us to use this as a measure of green shoots but if it continues it could be a sign of stablisation.”
