Given the intense focus on Australia’s housing markets at the moment and in light of our recent commentary around the best way to interpret auction market results (see here) we will start putting out short previews each Friday and summary updates the following Monday setting out how results should be viewed.
Key points heading into the April 6-7 weekend –
Last weekend (March 30-31):
final ‘unadjusted’ clearance rates: Sydney 54.3%; Melbourne 52.1%
slippage between preliminary and final estimates: Sydney -11.6pts; Melbourne -1.4pts
‘withdrawal rates’: Sydney 12.7%; Melbourne 4.3%
estimated seasonally adjusted clearance rates: Sydney 52.9%; Melbourne 50.9%
estimated ‘withdrawal adjusted’ clearance rates: Sydney 54.2%; Melbourne 49.6%
The wash-up for March shows a modest firming in conditions with Auction clearance rates lifting into the 50-55% range and withdrawal rates returning to more normal levels with a more noticeable improvement in Sydney.
This weekend (April 6-7), based on historical averages:
assumed slippage between prelimimary and final estimates: Sydney -5.5pts; Melbourne -1.5pts
seasonal adjustment: Sydney -1.4ppts; Melbourne -1.2ppts (slightly smaller than for March results)
‘withdrawal rate’ adjustment, deduct difference between observed withdrawal rate and: Sydney 14%; Melbourne 3%
As discussed in previous commentary, ‘withdrawal adjusted’ clearance rates in the 50-55% range are broadly consistent with stablising prices. If withdrawals return to normal, this would be consistent with Sydney preliminary clearance rates in the 57.5-62.5% range and Melbourne preliminary clearance rates in the 53.8-58.8% range.
However, the significantly higher slippage between preliminary and final auction clearance rates in the Sydney market (around 10pts vs the 5.5pt average) suggests preliminary estimates for Sydney should continue to be treated with extra caution. Indeed the scale of the differences argues strongly for waiting until final results are published before judging week to week developments.
All figures are based on preliminary and final auction results provided by CoreLogic.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
