Auction clearance rates fall in Victoria

By Leith van Onselen

The auction clearance rate fell in Victoria over the weekend, with the number of auctions up significantly on the prior week’s action, which was interrupted by the Spring Racing Carnival. The Real Estate Institute of New South Wales (REINSW) has not updated its auctions data for the weekend, precluding us from providing an update at this time.

In Victoria, 790 auctions were scheduled to take place over the weekend. A preliminary auction clearance rate of 60% was recorded from the 733 auctions reported to the Real Estate Institute of Victoria (REIV). This result compares to a provisional clearance rate of 62% recorded last weekend on just 163 auctions, which was later revised down to 59% once late unreported sales were recorded. The result was, however, a big improvement on the same weekend of last year when a 51% clearance rate was recorded on 824 homes auctioned.

Turning to new data from the REIV (below), you can see the lift in auction activity across Victoria in October. The auction clearance rate for the month of October 2012 was 62% on 3,025 auctions held, with 1,890 selling. This compares to a clearance rate of 55% on 2,770 auctions in October 2011, and 69% on 3,760 auctions in October 2010.

You can also see that the clearance rate in Victoria has trended up over the past five months, from: 56% in June; 58% in July; 60% in August; 61% in September; and 62% in October (see below chart).

Finally, last week’s clearance rates of 60% and 59% respectively reported by the REINSW and REIV were similar to those reported later in the week by RP Data, which recorded a weekly clearance rate of 58% and 59% respectively 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.

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Comments

    • Yep, I agree, on top of this, its actually really bad. You have government rushing to drop interest rates, HIA and RIs trying their best to fudge and delay figures, MSM under reporting. Basically you have every powerful means of miss-leading the public hard at work and auction clearance rates still drop.

      As for the %51 last year vs %60 this year, well who knows, I would say these companies are just as bad as the Chinese gov when it comes to fudging figures.

      One thing is for sure, it would seem that the EU is in a much more dangours position now and we have lost our mining boom.

      Can only see realstate getting a lot worse.

      • Way too many vested interests with a stake in it so the public aren’t getting accurate information about what’s actually going on (hence people turn to sites like Marcrobusiness!). State Governments in particular are keen to keep prices moving up because they are dependent on Stamp Duty to keep the bottom line from sagging.

        A friend of mine in construction told me the other day he’s never seen it so quiet for residential construction and that his boss (and many others like him) are pressuring the State Govt to bring back generous First Homebuyer Grants in the belief that will be sufficient stimulus.

        It’s really hard to know what the situation will be like in another 12 months, let alone five years.

        • Tell your friend to tell his boss to tell the land owner to cut the profit on their banked land. Which of course is where the problem lies.

  1. Clearance rate manuipulation (fraud, lies and bullshit) seems to me to be more about self-interested people (auctioneers etc) keeping their jobs. Why would you recommend to your client (sellers) to go to auction otherwise?

    I think there is a lot of evidence that auctions are not a great idea for many vendors in this environment. Yet, there are still enough dummies that lock themselves in with a RE agent and commit to the marketing spend etc. The fees and commitments may vary by state and agent, but I bet there are no agents who offer “no sale no cost”. So the risks are certainly with vendors. The clearance rate is all about supporting part of the industry and making payments on those shiny Eurocars the auctioneers drive!

    • I believe that the Jenman affiliated agents offer a “no sale, no cost” agreement. At least they used to. From experience I can say that they provide a far more transparent and honest experience than traditional RE agents.

    • Auctions are still rigged. A mates ex sold her house for 100k more, after a friend placed dummy bids. DON’T trust real estate agents.

  2. TheRedEconomistMEMBER

    I went to my first Auction in a while… and it was a complete farce.

    Was a tri-level 3 bedda in a small complex of 8.

    Inside was Ok… but outside there were cracks in the concrete… paint was peeling and old.

    Strata was $640.00 a quarter.

    There seem to be a few registered bidders… but they kept there hand in there pockets.

    The only person whom bid was over the phone through one of the selling agents (dodgy)

    Started at $520K… then vendor put a bid at $530K. Person on the phone went $540K and then $548K for some reason.

    I do not think Reserve was met… I wonder how much the auctionerr charged?

    Most of the people whom were in attendance from neighbouring complexes whom paid to much off the plan.

    Ouch

  3. This morning I read the REIV’s version first, which painted a typically bullish picture, comparing year on year improvements blah blah blah….

    Funny how the REIV’s volume vs clearance chart puts their “see how good we’re doing” into perspective. Yikes.

  4. Interesting that two recent hot spots on the real estate market, Perth and Canberra, have both dropped to 45% and 46% clearance rates.

    Canberra I understand, a possible over supply but what’s caused Perth to drop under the magic 50%?

    I thought Perth was still going nuts?

  5. This article in the Ag today was interesting: http://theage.domain.com.au/real-estate-news/millionaire-homes-draw-in-the-innercity-buyers-20121110-29546.html

    Fist half spruiked how $1-2 million is going well but then says “properties in the $500,000-$750,000 segment were harder to sell than $1 million-plus ones. ”It hasn’t been as buoyant and there haven’t been as many buyers,””.

    Further down was this little gem:

    “But another auction last weekend of a two-bedroom cottage in Rathdowne Street, Carlton North, was different. Mr Osborne said the single-fronter sold for $650,000. ”The vendor paid $767,000 for it 12 months ago and that was not a bad house,” he said. ”Quality property is flying along but it is not all happy days out there.”

    $117k loss plus costs in 12 months- gold!

    • That’s a capital loss of nearly $10,000 per month.

      You might as well go to the casino and flush away ten grand a month – at least there you’d have a slim chance of winning some of your money back…

  6. Reminds me in mid 90s of a state bank auditor friend in Turkey who told me in the good old days of stagflation that even if everybody knows inflation is generally 100-150% our official rate will always 77.9% or thereabouts (and lower if possible).

    Does not say much for the Oz real estate industry, media, MB nor Mr. vO who take this data at face value and expect us to take them seriously…..