Auctions bounce suggests “we’re coming out of the bottom”

CoreLogic released its preliminary auction report yesterday, which reported another weak clearance rate on soft volumes.

The preliminary national auction clearance rate was just 57.2%, slightly above last week’s 56.8% but well below the 62.8% final clearance rate recorded in the same weekend of last year:

Auction volumes nationally were 1,978, which was actually above last year’s 1,839 auctions:

Once revised the numbers nationally will likely fall into the low-50s.

Preliminary clearances were below last year’s final clearance rate in Sydney (-1.0%), Melbourne (-10.1%), Brisbane (-10.8%), Adelaide (-3.9%), Perth (-0.7%), and Canberra (-0.2%). Again, these are based on preliminary clearance rates, which are overstated and will be revised lower.

While the auction clearance rate is experiencing its usual seasonal bounce – as shown in the first chart above – clearances are well below the same weekend last year (when prices were also falling), suggests dwelling values will continue to fall at a brisk pace.

Not so, according to Jellis Craig selling agent, Trevor Gange, who claims Melbourne’s property market is recovering:

Mr Gange said he felt the market had markedly improved since late last year, when Melbourne saw record low clearance rates. In March, the city’s clearance rate bounced off its late 2018 lows to 48.9 per cent over the month, Domain data show.

“The market has embraced the new criteria the banks have,” he said. “I’d suggest the market is coming back. If clearance rates are about that 60 per cent range, we’d be considered a traditional market.

“We’re coming out of the bottom of the market.”

Good try Trevor. Melbourne’s final clearance rate averaged 52.1% over March, according to CoreLogic, which was down from a 68.0% average over March 2018. Meanwhile, annual price falls across Melbourne (which accounts for seasonality) has accelerated towards double-digits:

If that suggests “the market is coming back”, then I’m Father Christmas.

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