- The latest figures show a bounce back to 14-month highs
- Sydney and Melbourne see highest clearance rates in 18 months
- Domain said markets could be showing signs of stabilisation
Buyers continue to return to the property market with auction clearance rates now bouncing back to a fourteen-month high of 66%.
According to the Domain Auction Report for April 2023, it is the first annual increase in clearance rates for fifteen months across the combined capitals and sixteen months across the combined regionals.
Sydney was the best-performing capital city, hitting an 18-month high of 67.9% in April. Melbourne’s clearance rate reached an 18-month high, and the Victorian capital also saw its first annual improvement since August 2022, with clearance rates at 67.3%.
Canberra was the only capital to see a monthly decrease in its clearance rate and also experienced a significant decline over the year.
Adelaide saw the only monthly increase in auction activity, while all other cities declined.
Domain’s Chief of Research and Economics Dr Nicola Powell said the auction activity suggests the market could be through the most recent decline in prices.
“Almost all capital cities saw a monthly increase, with the most auction-centric cities, Sydney and Melbourne, now reaching clearance rates higher than the same time last year,” said Dr Powell.
“This is further evidence that the housing market has stabilised or passed through a trough in some capital cities.”
Dr Nicola Powell, Domain’s Chief of Research and Economics
“As clearance rates rise and housing confidence improves, it could motivate nervous sellers back into the market to help to boost supply.”
April continues the run of improved clearance rates seen in 2023. Although auction listings have been weak since the Spring of 2022, as clearance rates rise and housing confidence improves, it could motivate pent-up sellers back and help to boost supply.
Combined capitals and combined regionals clearance rate
Houses outperform units
Across the capital cities, house clearance rates are higher than units Dr Powell said.
Most capital cities followed this trend, while Brisbane saw unit clearance rates perform better.
The run of higher unit clearance rates in 2023 has stalled in April but ongoing issues with affordability, lower borrowing capacity and perceived value help support the performance of units. All the capitals had a monthly increase in house clearance rates to reach a high of ten months or more according to Dr Powell.
Low auction volumes
Dr Powell said one of the backbones underpinning improved conditions has been the unseasonably weak flow of new listings since Spring 2022.
She said a decline in auction listings has also supported more positive outcomes for sellers as rising competition indicates buyers’ willingness to place favourable auction offers while choice remains limited.
As a result, auction volumes have fallen over the month and remain lower over the year.
Adelaide saw the only monthly increase in auction activity, while all other cities declined. Lower auction volumes are expected due to the numerous public holidays in April. All capitals remain down from a year ago; Sydney is down 34.5%, Melbourne 38.5%, Brisbane 34.7%, Adelaide 34.0%, and Canberra 42.8%.
Properties selling prior to auction
Dr Powell said there were also a large number of properties never making it to auction.
“The proportion of properties sold before auction day has also risen for the third month in a row across the combined capitals.”
“Sellers are more inclined to accept offers before auction day due to subdued demand but equally, buyers are competing on a smaller pool of auctions.”
Despite the reduced action activity, Dr Powell said that she thinks the cash rate nearing its peak could be the spark to help bring back more buyers.
“April’s interest rate pause could be the sentiment changer needed for Australia’s housing market.”
“Falling Australian inflation should enable the RBA to remain on hold today, but it’s a close call.
“Nonetheless, all signs are pointing towards interest rates being at, or close, to a peak.”
Clearance rates
