Auction clearance rates going sideways

By Leith van Onselen

Auction clearance rates over the weekend were 59% in Australia’s two major markets – Sydney and Melbourne. This compares to a year-to-date average of 62% and 61% respectively, according to the Real Estate Institutes of New South Wales and Victoria.

In Victoria – usually the auction capital of Australia – the clearance rate was above last week’s level (55%) and the same week last year (53%). However, the reported number of auctions (432) were well below last week (594) and the same weekend last year (465):

In New South Wales, auction clearance numbers were also down, with the number of reported auctions (435) below last week (447) and the same weekend last year (480):

As noted last week, the recent -75 basis points of cuts to official interest rates since early-May appear to have done little to reinvigorate the auction market.

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Comments

  1. You can show any clearance rate you like when on the friday you forecast 597 auctions then report on low 4s post saturday.

  2. Can I please ask for a MacroBusiness clearance rate – that assumes unreported auctions are not sold. I know it’s an easy calculation to do, but I’d prefer not to have to make it myself every time I read this article.

    It would also be interesting to chart the official clearance rate and the MacroBusiness clearance rate… at stressed times, the gap between the two series should rise, as it becomes in an agents’ interest to avoid reporting auctions.

    • Actually, better is a recalculation including withdrawn and postponed.

      If you include withdrawn and postponed (total 70) auctions to the NSW auctions, then the clearance rate falls to 50.5% (255 / 505).

      Not exactly healthy…

  3. ‘Sideways’? ‘SIDEWAYS’!

    I must give you credit UE for your generosity of spirit toward those who make their crust misleading the general public about the real state of the RE market.

    The volumes are tiny, and even at these truncated levels half don’t sell.

    Potential buyers aren’t coming back until the metrics look significantly different.

    • I notice that on the weekend the AFR jumped on ANZ’s “property prices are at fair value” bandwagon. As MB would call it, some good old churnalism….

      Stupid thing is that their numbers are wrong! ….argument goes something along the line of, “lower interest rates justify higher prices”….completely flawed assumption.

      If you bought in 1970, on a 20 year loan (variable interest rate) the total cost of your mortgage, adjusted for inflation, wages & interest, would come out at 4.978 times earnings for Sydney, 3.479 times earnings in Melbourne, and 4.874 times earnings in Perth.

      If you bought under the same loan conditions in 1990 (so 20 yr loan, etc) the multiple would be 10.81 times for Sydney, 7.52 for Melbourne and 5.95 in Perth.

      …IF YOU BOUGHT TODAY, even if we see average interest rates plateau @ 7.5% (and normalised inflation around 2.5%) the multiple comes out at 11.87 for Sydney, 10.73 for Melbourne & 8.49 in Perth.

      (….increase interest rate average to 8.50% and the multiples jump to 12.82 Sydney, 11.59 Melbourne, 9.17 Perth).

      …at any rate, to claim that interest rates justify the affordability is selling their own agenda of fuelling consumer debt.

      Hence: it is bananas.

      • We also broke the data down adjusted against household size; i.e., working out how much per resident the cost of housing is…..

        in 1970 (3 per household) houses cost approx 1.5 times full time earnings in Sydney & 1.05 times Melbourne.

        1990 these multiples jumped to 3.86 and 2.68.

        in 2012 we’re at 4.57 and 4.13 respectively (that’s based on a current household size of 2.6, so may need to be adjusted if we can find more current data…. I believe household sizes are back on the up)

        One explanation for the rise could be higher participation of women in the workforce, however with a household size of 2.6 it still can’t justify the jump. Perhaps wage discrepancy between men & women explains some, in which case maybe the average household is 2.6 men working full time…. (sounds like a kind of household the Catholic church would be trying to break up)

  4. StanGoodvibesMEMBER

    Ah excuse me – the clearance rate for the 4 ‘The Block’ properties was 100% AND they were all sold massively over the reserve.

    http://bit.ly/QRouG3

    Surely a sign that the Melbourne property market is on the up.

    Huzzah!

    • My wife and I used to live just up the road from there (in what was a much nicer part of Dorcas St….though that said, by all accounts they have done an awesome renovation job).

      A good friend of mine who has a house down the road in Port Melbourne commented that the prices seemed fair, judging from the advertised prices of others (half a km away in Albert Park & Middle Park).

      It’s incredible the yardstick measures used to ‘value’ properties!

      Bananas!

      • Unfortunately it’s still the same shitty old brick underneath. Didn’t do anything to fix that.