Australian auction clearance rates fall below 50%

Preliminary auction clearance rates in Australia fell below 50% last week. Reporting rates were also softer, pointing to the likelihood of a large downward revision when final figures are released in four days time.
Melbourne recorded a preliminary clearance rate of just 47.5%, putting the city on track to record the lowest final clearance rate since the middle of 2012.
Preliminary clearance rates across most other capitals — including Sydney — improved over the week, although this was likely impacted by poor reporting levels.

Preliminary auction clearance rates in Australia fell below 50% last week, hinting that recent home price falls could accelerate a touch in the period ahead.

According to CoreLogic, just 49.8% of reported auction results across the capitals last week resulted in a sale, down marginally from a week earlier when a preliminary reading of 50.7% was recorded.

CoreLogic received results from 1,504 of the 2,119 auctions held, equating to a reporting rate of 71%, below the 72.4% level seven days earlier.

Of those received, 744 properties sold prior to, at or after auction while 760 failed to clear, including 120 that were withdrawn prior to going to market.

In the same week a year ago, a final clearance rate of 64.7% was recorded from 2,519 auctions held.

The large proportion of unreported results last week — some 615 — points to the likelihood that final clearance rates will be revised sharply lower when released in four days time.

In the prior week, the preliminary reading of 50.7% was revised down to show a final rate of 47%.

Over the week, 47.6% of housing auctions cleared across the capitals, below the 55.4% level for units, continuing the pattern seen in recent months.

By individual capital, the national weakness largely reflected a sharp decline in Melbourne’s preliminary clearance rate which fell to 47.5% from 52.1% a week earlier.

CoreLogic received results from 845 of the 1,088 auctions held across the city, a reporting rate of 77.7%. That was down from 78.6% a week earlier, pointing to the likelihood that final figures for the week could be revised even lower.

In the previous week, a final clearance rate of 50.4% was reported, the lowest level since July 2012. Given the preliminary figure and decline in reported results, it looks like a new low in the current cycle could be seen when updated figures are released on Thursday.

In the same corresponding week a year earlier, Melbourne recorded a final clearance rate of 70.3% from 1,251 auctions held.

While Melbourne’s preliminary clearance rate fell, Sydney’s went in the other direction, a result undoubtedly helped by weak reporting levels.

CoreLogic reported a preliminary clearance rate of 52.2%, up from 52% seven days earlier. However, the group only received results from 429 of the 659 auctions held across the city, representing a reporting rate of just 65.1%.

In the prior week, a reporting rate of 67.1% was recorded in Sydney. As tardy results were received, that preliminary rate of 52% was subsequently revised down to just 45.1%.

A similar outcome cannot be ruled out on this occasion, putting Sydney at risk of recording the lowest clearance seen since late 2008.

In the same week a year earlier, Sydney’s final clearance rate stood at 61.3% from 823 auctions held.

The reduction in clearance rates in both Sydney and Melbourne over the past year, despite a noticeable reduction in properties going under the hammer, reflects just how soft auction market conditions are at present.

Current levels also point to the likelihood of continued price decline in the period ahead, with the risk of even steeper falls based on historic relationships.

Markets will receive a further update on that front later today when CoreLogic releases weekly price movements from Australia’s five mainland state capitals, Sydney, Melbourne, Brisbane, Adelaide and Perth.

Outside of Australia’s largest cities, preliminary clearance rates improved in Brisbane, Adelaide and Perth but weakened in Canberra week-on-week. With the exception of the latter, reporting rates were weak, hinting that final clearance rates could be revised substantially lower.