Auction volumes have fallen more than 60 per cent as a result of the coronavirus pandemic.
The on-site auction ban and worsening economic climate have encouraged most vendors to shelve their selling plans until market conditions improve.
Although national property prices continued to rise in April, albeit at a noticeably slower pace, only 590 homes were taken to auction this week – down 60.1 per cent on the same time last year (1479 auctions).
The sharp drop in scheduled auctions resulted in an improved clearance rate for the week, although analysts warn this could be revised down in coming days as more results are accounted for.
Of the 354 capital city auctions captured by property analytics firm CoreLogic, 209 were sold – returning a preliminary clearance rate of 59.6 per cent.
Sydney and Melbourne achieved stronger results, returning preliminary clearance rates of 62.7 per cent (539 auctions) and 63 per cent (672 auctions) respectively.
It comes after the auction market in March recorded its lowest clearance rate since CoreLogic began keeping records in 2008 (37.3 per cent across the capital cities).
CoreLogic auction commentator Kevin Brogan said auction volumes had seemingly hit rock bottom, with auctions scheduled for this week “set in train in full knowledge of the COVID-19 restrictions”.
“It’s likely the number of scheduled auctions will remain substantially lower than normal, at least until social distancing policies are lifted and on-site auctions can resume,” Mr Brogan wrote in a note.
“With fewer scheduled auctions, we are likely to see the withdrawn rate start to normalise, which is likely to have a positive flow-on effect to the clearance rate.
“It has been dragged lower over the past month due to a surge in auction withdrawals, which are counted as unsold in the clearance rate statistics.”
The results come after CoreLogic figures revealed this week that values have yet to be affected by the coronavirus pandemic.
National prices increased 0.3 per cent over the month, but fell 0.3 per cent and 0.1 per cent in Melbourne and Hobart respectively.
However, economists warn it’s only a matter of time until the pandemic catches up with the property market.
Although six-month mortgage holidays will minimise price falls by reducing the number of forced sales over that time frame, a sharp rise in unemployment could trigger a wave of loan defaults down the track.
That would lead to a spike in mortgagee-in-possession sales at a time of weak demand, thus driving down the value of property.
AMP Capital chief economist Shane Oliver said a 10 per cent price fall was the most likely outcome – which would see prices fall back to where they were in July – but SQM Research has also outlined a “worst-case scenario” where properties lose 30 per cent of their value.
The most expensive sales across the capital cities
- Sydney’s most expensive confirmed sale was a four-bedroom, two-bathroom home at Newtown ($2,410,000)
- Melbourne’s most expensive confirmed sale was a three-bedroom, one-bathroom house at South Yarra ($1,950,000)
- Canberra’s most expensive confirmed sale was a five-bedroom, three-bathroom house at Amaroo ($1,150,000).
CORRECTION (May 4, 2020): An earlier version of this story incorrectly stated that auction volumes had fallen 40 per cent as a result of the coronavirus pandemic. They have fallen 60 per cent.