The property industry is pointing to high auction clearance rates as evidence of a strong post-election recovery, but experienced analysts say the latest figures only tell half the story.
Last week recorded the highest final clearance rate (61.8 per cent) since May last year, prompting those with skin in the game to suggest the market was heading back to business as usual.
But Suburbanite director Anna Porter told The New Daily that analysing auction clearance rates wasn’t the best way to check the pulse of the market – at least, not in isolation.
Ms Porter said this was partly because clearance rates didn’t offer much insight into broader market activity and partly because auctions weren’t as popular in Adelaide, Brisbane and Perth as they are in Sydney and Melbourne.
“[Outside Sydney and Melbourne], agents sometimes put an auction campaign forward to create a deadline and to create some urgency to get people to make some decisions – [rather than] with a strong intention of selling on the night of auction,” she said.
“Auction clearance rates are really only one part of the puzzle.”
Ms Porter said those commentating on the health of the market also needed to take into account vacancy rates, median prices and median number of days properties spent on the market before being sold.
Wakelin Property Advisory director Jarrod McCabe pointed to the year-on-year fall in the overall number of auctions as another reason not to get too excited by the recent high clearance rates.
This time last year, 1849 auctions took place across the country, 641 took place in Sydney, and 941 took place in Melbourne, according to CoreLogic.
However, this week there were only 1480 auctions across the country, 551 in Sydney and 644 in Melbourne.
So while clearance rates this week (63.7 per cent) were higher than this time last year (55.5 per cent), fewer properties actually found a buyer.
“The recent results give us a fairly clear illustration that the supply levels are down, but I don’t think they are evidence of more buyers in the marketplace,” Mr McCabe said.
“Supply always flattens in winter – particularly in Melbourne and Sydney – because vendors don’t feel their properties present in the best light and some buyers go dormant.
“And vendors who don’t have to sell are also waiting until reasonable prices have been achieved before putting their property on the market.”
Because fewer auctions naturally mean higher clearance rates, Mr McCabe said analysts would have to wait until spring to determine the strength of the post-election market recovery.
And by that time, he said, the RBA rate cut and APRA’s easing of mortgage serviceability tests would likely have flowed through to improved market sentiment.
“If we haven’t yet reached the bottom of the market, we’re certainly not far from it,” Mr McCabe said.
The high clearance rates come as Moody’s Analytics predicted on Monday that values would “trough in the third quarter of 2019” and gradually recover thereafter.
CoreLogic senior research analyst Cameron Kusher is feeling optimistic, too.
He told The New Daily that the market was looking the best it had since prices first started to drop in 2017.
“We’re not back to boom time, but we’re certainly better than we have been over the past 12 to 18 months,” he said.
“Since the federal election, we have seen a step up in auction clearance rates – and I think that definitely points to a level of confidence in the market that wasn’t evident before the election.”