- The clearance rate had decline for five months before this rise
- Volumes, however, continue to decline
- Affordability concerns, however, might result in a quieter spring
After five months of a steady decline in clearance rates, data from Domain has revealed that all the capital cities saw witnessed an increase in August.
However, on an annual basis they remain lower, aligning with the overall decline in the property market, and as seller pricing is adjusting to meet the expectations of buyers.
Auction volumes have fallen for four months in a low across the combined capitals, taking it to the lowest level since September 2021, when strict COVID-related restrictions were in place across much of the population, especially Sydney and Melbourne.
Clearance Rates
Although winter is typically a quiet time of the year for buyers and sellers, auction listings are tracking lower compared the same time in 2021. This decline indicates buyer confidence is falling. Sydney is the only city to see an increase over the year, although this is primarily due to the drop in volumes recorded during the lockdown the same time last year.
The proportion of properties sold before auction day has increased over the month across the combined capitals. However, this level remains lower compared to historical levels. Sydney shows show the largest proportion of sold prior and withdrawn auctions of the capital cities.
Unit vs houses
The Domain data shows that unit clearance rates outperform houses outside of the Sydney and Melbourne market. This is consistent with the trend of greater price falls in houses compared to units. Although the preference for house remains, affordability and financial limitations could put pressure on the clearance rate in the future.
Domain Chief of Research and Economics, Nicola Powell, said as the winter selling season concludes, spring is typically the time of the year that sees new listings and rising buyer activity.
“However, conditions will be different this spring 2022 as future interest rate hikes and the ongoing impact on buyers’ borrowing power and mortgage affordability could weigh more on buyer sentiment and confidence,” warned Dr Powell.
Dr Powell added that Sydney saw an improvement in its clearance rate for the first time since February, “after revising down in July but is almost 24 percentage points lower over year, the second biggest annual drop among the capitals, behind only Canberra. This is the fourth consecutive month clearance rates remain below 55%, the weakest outcome since May 2019.”
Melbourne has seen the biggest monthly jump in August, after five months of declining clearance rates.
“Melbourne was the only city to see an annual uptick but it’s worth noting strict COVID-related restrictions and a lockdown were in place this time last year,” she added.
