- Property market confidence rebounds with high auction clearance rates
- Sydney leads with highest clearance rate in three years
- Sellers accepting offers before auction
Despite ongoing interest rate pressures, confidence in property has continued to bounce back with a new report showing that auction clearance rates have now hit a 17-month high.
The Domain Auction Report for May 2023 shows that clearance rates across the combined capitals hit 71%, the highest point since October 2021.
While the combined regionals (50.7%), have also reached a 14-month high.
Domain’s Chief of Research and Economics, Dr Nicola Powell said sentiment has shifted in the market at the moment.
“All capitals except for Canberra saw a monthly increase in clearance rates with Sydney, Melbourne and Adelaide all above 70%,” said Dr Powell.
“The continual rise in clearance rates aligns with the broader momentum that has built as Australia’s housing market begins to recover.”
Dr Nicola Powell, Domain’s Chief of Research and Economics
Sydney the strongest
Looking across the country, Sydney remains the best-performing capital city in May. The clearance rate is up for the second consecutive month and is above 70% for the first time since October 2021, marking the largest monthly jump in three years. The clearance rate is also higher annually by 21.3%, the steepest of the capital cities and its largest increase since April 2021.
Melbourne’s clearance rate improved for the fourth consecutive month to reach above 70% for the first time since October 2021. The monthly and annual growth rate saw its highest increase since September 2021.
Brisbane remains the weakest capital city despite its clearance rate seeing the steepest monthly increase of the capitals this month. This is the best clearance rate and first annual growth since February 2022. The variation in clearance rates is not unusual for Brisbane, given it is a less auction-centric market, and the outcome aligns with its historical performance said Dr Powell.
Canberra was the only capital to see an annual decline in its clearance rate but also experienced a significant monthly increase over the year. All other capital cities saw a monthly increase in clearance rates and are up annually.
Adelaide’s clearance rate is up in May and above 70% for the first time since March 2022. It is the steepest monthly jump since June 2020 and the first positive annual growth in clearance rates since February 2022 This is a significant improvement from the deep annual declines recorded over the second half of 2022.
Auction performance for May 2023
| Location | Clearance rate | Monthly change | Annual change | Auction volume | Sold at auction | Passed in | Sold prior | Withdrawn |
|---|---|---|---|---|---|---|---|---|
| Combined Capitals | 71.0% | 7.5ppt | 15.2ppt | 6,907 | 3,662 | 972 | 27.7% | 10.2% |
| Combined Regionals | 50.7% | 7.2ppt | 7.1ppt | 1,118 | 349 | 221 | 17.9% | 17.2% |
| Sydney | 74.3% | 8.5ppt | 21.3ppt | 2,765 | 1,596 | 263 | 37.4% | 13.4% |
| Melbourne | 70.2% | 4.5ppt | 14.2ppt | 2,911 | 1,536 | 469 | 22.6% | 8.3% |
| Brisbane | 59.0% | 15.6ppt | 7.5ppt | 444 | 171 | 95 | 16.6% | 8.3% |
| Adelaide | 71.8% | 7.8ppt | 6.7ppt | 417 | 201 | 70 | 12.1% | 3.2% |
| Canberra | 66.7% | 14.4ppt | -0.3ppt | 290 | 150 | 60 | 22.2% | 6.7% |
| Perth | – | – | – | 70 | 5 | 12 | – | – |
| Hobart | – | – | – | 1 | – | – | – | – |
| Darwin | – | – | – | 9 | 3 | 3 | – | – |
Source: Domain.
Volumes declining
A lack of supply with sellers seemingly unwilling to take their homes to market has also contributed to the higher clearance rates said Dr Powell.
“The mix of high interest rates, rising prices and rents and lack of housing supply shows that even though there are fewer homes going under the hammer, buyers are willing to place favourable auction offers when choice remains limited.
“However as clearance rates and buyer confidence rise, auction listings remain weak with Sydney down annually by 18% and Melbourne by 29%.”
Auction volumes across the combined capitals have fallen over the month and remain lower over the year. Lower auction volumes indicate seller confidence remains low.
Dr Powell said lower auction volumes indicate seller confidence remains low.
Listings are sharply down from a year ago with Sydney down 18%, Melbourne 29.1%, Brisbane 37.6%, Adelaide 52.2% and Canberra 26%.
Auction clearance rates and volumes
Sold prior steady
The proportion of properties sold before auction day has risen to its highest point since November 2021. Under the current market conditions, this suggests sellers are more inclined to accept offers before auction day due to robust offers from buyers said Dr Powell.
Meanwhile, unit clearance rates are higher than houses.
Dr Powell said it was mixed across the capital cities, with Sydney and Brisbane following this trend, while Melbourne, Adelaide, and Canberra saw unit clearance rates perform better.
“The run of strong unit clearance rates across the combined capitals seen in the first quarter stalled in April but shifted again in May.
“Affordability, lower borrowing capacity, and perceived value help support the performance of units.”
All capital cities saw a monthly increase in house and unit clearance rates, while Canberra was the only city that did not see positive annual growth.
