Westpac: Auction market “solid”

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.

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.


  1. Finally our bubble resumed a typical pattern . I was worried it’s different here and no bull trap would come but it’s finally here almost 2 years after the peak.

    • On the usual timescale that would mean probably 1-2 years of recovery followed by 20 years of declines which seems about right given the run up since 2000.

      • In USA country wide bull trap appeared in early 2009 just under 2 years after the peak so we may not be that different when it comes to bust timing.
        After the trap prices fell as much morevas from the peak to bull trap.
        Bubble wasn’t so widespread in USA so our bubble appears to be slower but fall following the trap is likely to extend further because there are no non-bubble areas to put floor

      • Not happy Jan. I need a 3 month max bull trap and evidence of a re-crash by November (otherwise i’ll have to buy). Not a 2 year one pls!

      • I’m in the same position Arrow. It was totally disheartening to witness crowds and multiple bidders at all auctions Saturday. Can only imagine what madness was occurring in the boom.

      • @bimou It was horrendous. My now wife and I were in the thick of it just before it really kicked. Even then it was awful listening to Auctioneers belittling those that wouldn’t just throw more money at it for their families future. From my experience they put that away for the last year but are emboldened again and have started that rubbish. If you are keen…be prepared for almost personal attacks on yourself to try to sucker you in.

      • Appalling Andrew. Fortunately I have a hard edge for that kind of rubbish from RE agents and can discard emotion. My wife not as well, she’s developing strong FOMO after witnessing last weekend. Especially the mainlander bids were terrifying- were being done in numericals on the agent’s paper pad, because they understood ZERO english (existing dwelling btw).

  2. Anybody checked the corelogic daily today? a sea of red for the first time. Adelaide has joined the party.

      • Cheers mate. I commented on this in the earlier “Auctions rebound” post, and Leith says he’s going to post an article about it later today.

  3. Hill Billy 55MEMBER

    Where’d Westpac find the happy sauce? Retail desperately needs some. Noted that Brisbane hasn’t come to the party.

    • This. Forget clearance rates and house prices over the next few months. Watch unemployment and inflation. Real economic pain ahead, then houses to resume death spiral.

  4. Went to several house auctions in Melbourne’s eastern suburbs on Saturday. Big crowds, multiple bidders for each (including some mainlander bids) and all sold. Was scary and completely deflating to witness, as we’re looking for a house to live in 2nd half of this year.

    The sentiment has definitely turned, time will tell if it’s a dead cat bounce but I’m fearful I’ll be wrong like the past decade on the ability of this bubble to continue defying gravity. Straya.

    • Same reports from colleague looking in the Northcote area for some weeks now, reckons prices will keep rising for years because of high demand.

      They sold in Hurstbridge a couple of months ago and now looking to down-size and up-debt. I love that combination! FFS.

    • Can confirm the same in South East Melbourne. things are selling in a week on things we were interested in. We went to a place and were going to offer. The Vendor had just dropped their asking price and got an offer over that within 5 minutes….Had been on the market for 4 months with not a single offer. Even the Agent was honest that he couldn’t believe they offered over the asking price.

    • Mixed bag on the sydney lower north shore. I’m in the market to a ppr, went to 2 auctions:

      https://www.domain.com.au/41-rhodes-avenue-naremburn-nsw-2065-2015300168 had a sole bid at 1.75 mill passed in, sold for an unknown price after. The house was pretty crappy on a large flat block right next to the freeway. I could see the motivation of a developer picking up a few of these to build townhouses on as an investment, can’t see why anyone would buy to live there though.

      https://www.domain.com.au/35-small-street-willoughby-nsw-2068-2015281486 nice place, layout a bit crap and living areas not very bid, good sized block, good location, but for anyone who knows the area, the road is absolute carnage on saturdays with the pool and netball courts carpark outside it. The real estate agents are friends of ours, they were thinking 1.6, revised up to 1.8 after first week. They’d sent out 30+ contracts by the end of the second week, auction went gangbusters going for about 2.2. They thought it was a ridiculous price.

  5. kannigetMEMBER

    I think someone at WBC is on the sauce a bit early in the week. The clearance rate figures they sprout are a fair bit higher than the overly optimistic corelogic ones…

    Unless its because a lot more properties backed by WBC mortgages sold….. and that could be a reflection of those vendors needing to meet the market more than those from other mortgage providers.

  6. Kind of weird to see 281 houses sold at auction in Sydney being seen as anything other than a catastrophe.

    • It depends on how you look at it. It’s only a catastrophe if you think ever increasing property prices are A Great Thing. I think they’re A Sh!t Thing, so I see that tiny volume as an excellent result. I know I’m in the minority.

      • I guess it’s that it is a wunch of bankers in the form of Westpac seeing 280 as a good number that’s surprising.

  7. AndynycMEMBER

    I was in sutherland shire over the weekend. Not much in the way of people coming through.

  8. So we have a solid auction clearance rate and pickup in volumes with still declining prices? That cant be good. It means you have sellers meeting buyers, not the other way around. We have not seen this scenario in a very long time

    • It is sure starting to look like Vendors have finally got the Memo and are dropping prices. I just saw a place that is not yet to go to Auction drop it’s reference range by 100K. Could be games to try to lure more people to the Auction or it is reflective of vendor/agent capitulation.

      • Well 2bed apartment in my street that would have went for exactly $1.05m 2 years ago just passed in at auction and for sale now at $850k. Still think that is too high.