Clearance rates at auctions across Australia are in decline compared with previous years, despite the busy spring selling season.
In the two biggest markets, Sydney and Melbourne properties sold at auction were down a combined 15 per cent and 5.4 per cent respectively at the weekend in comparison with 2016 figures.
Across the capital cities, there were 2490 auctions held this week, up from 2258 last week, making it the busiest week for auctions since early June.
However, buyer turnout dipped sharply. Preliminary results from CoreLogic showed a national clearance rate of 70.3 per cent – 7.75 per cent lower compared with the corresponding date last year (76.2 per cent).
Sydney fared slightly worse than the national figure with a preliminary clearance rate of 69.4 per cent from 897 auctions, compared with 81.6 per cent of 815 properties sold at auction in the same week in 2016.
That marked a 15 per cent decrease compared with 12 months prior, but was actually better than the previous week, when the city recorded a clearance rate of 65.8 per cent from 826 auctions.
Independent buyers advocate Cate Bakos said the drop in clearance rates was not even across the board.
“I think Sydney’s overall drop is more pronounced than Melbourne’s but what is interesting is the reference to segmented regions,” Ms Bakos said. “City clearance rates assume an averaging model but when we segment areas it becomes obvious that not all suburbs, dwelling types and streets are equal.
“I think it’s very unfair to suggest that Melbourne is experiencing a ‘clear drop’ when there is limited evidence to suggest this. Melbourne’s recent weekend’s clearance rate compared to last year’s was only slight – and this is compounded by the fact that stock numbers were higher this weekend than the corresponding 2016 weekend.
“Melbourne has different drivers to Sydney, and again I like to refocus on the regions, suburbs, sub-markets and dwelling types. Aside from strong inner-ring performance exhibited, Melbourne and Geelong are also experiencing a surge in first home buyer activity as a result of the state government’s stamp duty increased concession.
“Generalising markets in capital cities is often a confusing and somewhat fruitless exercise. Sub-markets perform in accordance with their various growth drivers and not all are in synch.”
Real Estate Institute of NSW deputy president Leanne Pilkington said it was clear rates similar to a year ago were unattainable.
“Last year was crazy with that 80 per cent-plus clearance rate, and [the] prices, every week there were new records being set,” Ms Pilkington told The New Daily.
“Clearance rates don’t get much higher than 82 per cent in reality, you’re going from an absolute high and an unusually strong market, so that’s not sustainable. You’re never going to get clearance rates at that level sustained for a long period of time.”
And despite Sydney’s poor results, Ms Pilkington said the drop in clearance rates was not a cause for concern as the property market softens.
“It seems to be building towards a reasonable spring season [but] I don’t think we are going to see that kind of demand,” she said.
“It’s almost 70 per cent of auctions sold under the hammer, it’s still reasonable, we are happy with a 70 per cent clearance rate.
“It’s not something the industry is concerned about, we like to see that because it means it’s not too hot, but it’s also not the other way. It’s a stable market. it’s a good, solid market.”
Melbourne outperformed most capital cities with a clearance rate of 73.6 per cent from a considerable 1268 auctions.
However, that figure was down from a clearance rate of 77.8 per cent from 815 auctions in the same week last year – a drop of 5.4 per cent compared with 2016.
“While it’s been a relatively slow start to the spring selling season, auction volumes rose this past weekend,” Real Estate Institute of Victoria chief executive Gil King told The New Daily.
“The clearance rate has softened in the past few weeks but we are still seeing strong demand for quality properties, particularly in highly sought-after inner suburbs.
“We anticipate the spring selling season will really get underway in October and given the level of buyer demand, vendors are likely to experience strong results under the hammer in the remainder of the year.”
Of Melbourne suburbs, Doreen. 26 kilometres north-east of the CBD, was the surprise packet with 100 per cent of its 30 properties selling at auction at the weekend, while Mill Park (90.5 per cent from 21) and South Yarra (88 per cent from 25) recorded the next best returns.
Adelaide saw the highest clearance rate over the weekend with 75 per cent of 98 properties, while in Brisbane, just 49 per cent of its 132 auctions sold under the hammer.