Auction clearance rates dip on low volumes

By Leith van Onselen

Auction clearance rates fell slightly over the weekend in Australia’s two major markets, with both states also recording low volumes.

In New South Wales, a provisional auction clearance rate of 63% was recorded from 396 auctions reported to the REINSW. This compares to a provisional clearance rate of 64% recorded last weekend on 426 auctions, and a year-to-date clearance rate of 61%. The number of homes auctioned was also well below the same weekend of last year when 477 auctions went under the hammer.

In Victoria, a provisional auction clearance rate of 61% was recorded over the weekend on 466 auctions reported to the REIV. This compares to a clearance rate of 62% recorded last weekend on 486 auctions.

Although this weekend’s clearance rate was above the 55% clearance rate recorded in the same weekend of 2011, the number of homes auctioned was -25% lower, with only 466 homes going under the hammer over the weekend versus 623 auctions in 2011.

In fact, auction volumes so far in 2012 are around -19% lower than the same period last year. In August, only 1,670 homes went under the hammer in Victoria, which was -25% lower than in August 2011 when 2,240 auctions were recorded, and -32% below August 2011 when 2,450 homes went under the hammer. However, the auction clearance rate in August 2012 was 63%, which is well above the 58% clearance rate recorded in August 2011, but below the 71% clearance rate registered in August 2010.

Once again, last week’s auction clearance rates published by the REINSW and REIV – 64% and 62% respectively – were more positive than those reported later in the week by RP Data, where clearance rates of 58% and 57% respectively were recorded for Sydney and Melbourne:

Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.

Leith van Onselen


  1. I was in Sydney on the weekend to attend an auction for my folks who are in the market. Their maximum valuation was quickly guzumped as it became a bidding war between two baby boomer parties who were obviously downsizing.

    I thought what my folks where willing to pay was a bit rich but it went 10% higher then that. If you have existing equity and want the place badly you can find the extra $. It’s a completly different market to gen X, Y buyers who need a big loan.

    Inner city, low maintenace houses near amenities are the target market for baby boomers and I think these properties will buck the plateau/sliding trend.

    I’m from Melbourne and the contrast in value between Sydney and Melbourne is striking. Amazed at what people see is a normal price in Sydney.

    • You are also seeing a pre Oct 1 spike in auction buyer activity in NSW.

      Tell your folks to wait till after 1 Oct if they can.

  2. Incredible that a 60% (or so) clearance rate is still somehow used by the RE industry as proof of strong demand. All relativities aside, that is a pretty crap conversion rate. Particularly if I’m paying $10k in the lead-up for advertising. Just saying. I know that most wouldn’t agree

    • I would certainly agree.

      Paying agents thousands of dollars for a product that fails 4-7 times out of ten (depending upon your location around the country) – with no money back – is utter foolishness.

  3. One aspect I cannot understand is why the “asking price” is quoted, and yet properties are passed in when buyer bids exceed the asking price. What does the “asking price” mean

  4. Leith not sure why you post these auction clearance rates as they say nothing important.

    Volume of sales (number of properties and total value of sales), and average time on the market before a sale are important figures that tell us something useful.

    RE Agents won’t hold auctions unless they are fairly confident they’ll get a sale.

    We’ve seen volumes falling constantly over the last 3 years but auction clearances have been fairly stable.