From Westpac’s Matthew Hassan:
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 are now putting out short previews each Friday and summary updates the following Monday setting out how results should be viewed.
Preliminary assessment of auction clearance rates, weekend of June 15-16 –
- preliminary ‘unadjusted’ clearance rates: Sydney 74.7%; Melbourne 67.9%
- assumed slippage between preliminary and final estimates: Sydney -5.5pts; Melbourne -1.5pts
- seasonal adjustment: Sydney -0.3ppts; Melbourne +0.1ppt
- ‘withdrawal rate’: Sydney 7.7%; Melbourne 3.3%
- ‘withdrawal rate’ adjustment, difference between observed withdrawal rate and average: Sydney 6ppts; Melbourne 0ppt
- estimated final ‘withdrawal adjusted’ clearance rate: Sydney 75.2%; Melbourne 66.3%
Auction markets had another solid showing this week with preliminary clearance rates into the mid-70s for Sydney and mid-60s for Melbourne. Withdrawal rates were well below average in Sydney and around average in Melbourne. Allowing for the typical slippage rates, final ‘withdrawal adjusted’ clearance rates should end up at similar levels, our estimates pointing to 75% for Sydney and 66% for Melbourne. If that proves to be accurate, it will mark the best result since for Sydney since April 2017 and the best Melbourne result since April 2018.
This was an important test for the market with the week being the first ‘clean’ read of post rate cut conditions – the previous week was disrupted by the Queen’s Birthday public holiday which saw very low volumes. As they stand, the preliminary results are well clear of the 50-55% range consistent with price stability and point to price gains of 2-3% a quarter. That said, the main caveat continues to be around low volumes – despite the pick up this week, the number of auctions is still in the 400-600 a week range, well below the 1000+ that were being regularly recorded the last time clearance rates were at these levels in both markets.
Note that all figures are based on preliminary and final auction results provided by CoreLogic.
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