‘Plenty of buyer interest’ as auction clearance rates hold above 70%

• Preliminary auction clearance rates remained above 70% for the past 12 weeks.
• This is despite three weeks of decline.
• The final auction clearance rate for last week was 66.8%.

Bidders remain active in Australia’s real estate market despite high-interest rates and a looming Reserve Bank of Australia meeting; preliminary clearance rates remained above 70% across Australia.

The latest data from CoreLogic shows that clearance rates had drifted lower over the past three weeks, but still managed to return a preliminary auction clearance rate of 70.7% last weekend from 1,729 auctions.

Although auction activity is increasing across the capital cities, as buyer sentiment recovers, current volumes remain lower than this time last year when 1,812 auctions were held and a clearance rate of 51.9% was recorded.

Sydney leads the way

The preliminary clearance rate was strongest in Sydney at 74.2% across 699 auctions, as buyers continue to remain active with prices recovering from their lows.

This time last year only 674 homes went to auction and the combined clearance rate only reached 50.8% in the Harbour City.

Real Estate Institute of NSW (REINSW), CEO, Tim McKibbin said there’s a lot of demand in Sydney for homes that are priced competitively.

“Recent auction activity indicates the level of demand remains strong and properties priced in accordance with the current conditions are receiving plenty of buyer interest,” said McKibbin.

“Volumes have been gently increasing yet even so, clearance rates remain above 70%.

McKibbin said there are a number of different reasons homeowners are choosing to sell in the current market, with some facing financial stress.

“Whether it’s investors selling as the attractiveness of residential property as an investment is diminished, or people selling due to mortgage stress or before this stress becomes a reality, some of the recent activity in the market is being driven by consumers in difficult circumstances.”

Melbourne volumes rising

In Melbourne, preliminary auction clearance rates hit 68% across 668 auctions and maintained an upward trend in auction activity over the past four weeks.

It is also the first time in 14 weeks the initial clearance rate was below 70% for Melbourne.

However, the results were significantly better than the same time last year, when a clearance rate of 52% was achieved across 710 auctions.

For the smaller capital city markets, Brisbane hosted 168 auctions, and achieved a preliminary clearance rate of 66.1%, up from the prior week. Adelaide was the next busiest capital with 115 auctions held, and recorded the strongest preliminary clearance rate among the capitals at 74.6%.

While Canberra hosted 67 auctions and recorded a 71.7% success rate. In Perth, 12 auctions were scheduled and four recorded a successful result.

Preliminary clearance rates

Source: CoreLogic.

Prices rising steadily

The strong auction results in Australia, have been in part because of the ongoing recovery in property prices around the country.

Over the last month, prices in Sydney rose again by another 1.1%, while Brisbane saw the largest increase at 1.2%. Melbourne values increased by 0.4%, Adelaide by 1% and Perth by 0.9%.

Property prices in Sydney have now rebounded 6.1% this year, making it once again the strongest property market in the country.

McKibbin said that even with the potential for further rate rises, prices continue to creep upward.

“Spring will soon be upon us, so it will be interesting to see if the current price trajectory will be maintained with a further increase in listings,” he said.

“Presumably, the systemic shortage of housing and the stalled supply response, despite the widespread recognition of the urgent need to build more homes, will continue to be the key drivers in keeping prices buoyant.”

According to McKibbin, there is still a lack of stock on the market, with people like downsizers still constrained by the cost of transacting property.