Auction clearance rates reach 77% as prices keep rising

• Auction clearance rates reach highest level since October 2021
• Tight supply and eager buyers driving up prices
• Prices continue to rise across major capital cities

Auction clearance rates have risen to the highest level since October 2021 with five capital cities now above the 70% mark.

The preliminary clearance rates for the week ending 4 June surged to rates 77.2% on the back of tight supply and buyers eager to return to the market and driving up prices.

According to CoreLogic, the start of winter saw capital city auction activity fall -2.9%, with 1,832 homes auctioned across the combined capitals for the first week of June.

Across Melbourne, 750 homes went under the hammer, down -11.1% from the 844 held last week for a clearance rate of 75.8%.

Sydney was the busiest auction market last week, with 754 homes auctioned across the city, with 79.6% of properties recording a positive outcome

Across the smaller capitals, auction activity rose in Canberra (81), fell in Brisbane (117) and held steady across Adelaide (118) week-on-week.

Brisbane recorded its highest preliminary rate since mid-February 2022 (80.7%), with 76.9% of auctions reporting a successful result. Canberra also recorded a preliminary clearance rate of 76.9%, while Adelaide’s preliminary clearance rate fell to 76.8%.

In Perth, just two of the seven results collected returned a successful result, while no auctions were held in Tasmania.

Auction Clearance Rates

Source: CoreLogic

Sentiment remains high despite rates rising

PropTrack Senior Economist, Eleanor Creagh said tight supply is putting upward pressure on both prices and clearance rates.

“We continue to see limited new stock coming to market, so buyer interest is being concentrated and vendors are benefiting from the fact that there’s less competition with other vendors,” said Creagh.

“This is working to underpin home prices and offset the downward pressure from interest rate rises.”

Creagh also said the economy has remained strong despite rising interest rates which is further adding to demand.

“We also have the unemployment rate close to a multi-decade low, which promotes a sense of job security.”

“Wages growth, while running behind inflation, has increased.”

Prices higher

According to CoreLogic, prices continued to rise last week* across the five major capital cities, up 0.2% for the week*.

Values continue to increase most in Sydney which recorded a 0.2% rise to 1.7% over the past month. While Brisbane also increased by 0.2% and 1.5% for the month.

Adelaide and Melbourne were both 0.1% higher, while Perth property prices increased 0.2%.

Creagh said the last five months of price rises have gathered traction across markets, potentially drawing buyers off the sidelines.

“As the recovery has broadened, we’ve seen sales volumes increasing and auction clearance rates are higher, holding firm above levels seen in the back half of last year when interest rates were first rising.”

Eleanor Creagh, PropTech Senior Economist

“There are factors that could weigh on the pace of price rises in the months ahead.”

She said with the seasonally slower winter market approaching, the pace of price rises that we’ve seen in recent months may slow.

“We know as well that as the economy slows in the months ahead, the unemployment rate is also expected to lift.”

“This could mean that buyers become a bit more cautious again as the sense of job security wanes.”

“Other risk factors include the upcoming increase in the number of borrowers who took advantage of record low fixed rate mortgages throughout the COVID period, rolling onto mortgage rates that are substantially higher.”

According to Creagh, there are several factors that will offset this increase, but it’s going to be a challenging period with budgetary adjustments required for many households.

“We do believe, however, that for the most part, homeowners will prioritise their mortgage repayments and we won’t see a significant uplift in forced sales.”

“The current pace of price growth could also slow if stronger market conditions improve seller confidence and we see a boost in stock coming to market in spring.

“By that point, interest rates could have stabilized, possibly helping to ease buyer concerns as interest rates are already closer to their peak than not.”

Upcoming auctions

Capital city auction activity is set to take a long weekend break this week, with 1,088 homes expected to go under the hammer across the combined capitals. This week’s subdued auction numbers represent a -40.1% week-on-week decline compared to the 1,815 homes auctioned last week.

Sydney is set to host the most auctions for the second week in a row, with 515 homes scheduled for auction across the city. This is -31.4% lower than the 751 auctions held last week, and 26 less than 541 homes auctioned last year.

While there are 320 homes scheduled to go under the hammer in Melbourne this week, down -56.5% from the 736 auctions held last week.

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*To note: The article was originally written on 8 June 2023 and reflects data available and the market at that time.