Domain has delivered a rare slice of honesty, admitting that its preliminary auction clearance rates cannot be trusted and do not reflect actual conditions, especially when the market is weak:
Sydney’s weekend real estate market bucked the falling trend of recent weeks, with the auction clearance rate climbing to 63 per cent.
But the preliminary auction success rate – up from 55.1 per cent last weekend – may be artificially high.
That’s because real estate agents only reported the results of 383 auctions from the 665 Sydney properties that were listed to be sold under the hammer on Saturday. Some 79 of the properties booked to sell at auction were withdrawn.
Domain Group data scientist Nicola Powell said with a number of results yet to be reported the revised clearance rate was likely to be lower.
“This will certainly narrow the gap between clearance rates over the past two weekends,” she said.
In boom markets, agents tend to quickly report 90 per cent of their auction results. In slower markets, the rate of real-time reporting can slip to 60 per cent or less…
AMP Capital chief economist Shane Oliver said finalised clearance rates in the low 50 per cent range or below had been historically associated with falling prices.
MB places far more weight on CoreLogic’s auction data, which tends to have a much higher sample:
That said, even CoreLogic’s preliminary clearance rates can be adjusted down fairly heavily. For example, the previous weekend’s clearance rate was initially reported as 60.3% by CoreLogic, only to then fall to 56.8% once further results were counted:
However, even then, there were still 318 missing results, meaning the true clearance rate was likely significant lower still.
At best, auction clearance rates are a useful guide to conditions in the market when measured on a like-for-like basis. But the raw reported figures need to be taken with a pinch of salt.
