The ban on traditional auctions, and the shift to online, has sent the clearance rate plunging to levels not seen since 2018 and early 2019.
According to CoreLogic, the preliminary national auction clearance rate plummeted to only 51.4% from 61.3% last weekend and only a smidgen above the 50.9% final clearance rate recorded in the same weekend last year:
Given these are preliminary rates only, and there are a significant numbers of actions yet to be counted (but also many withdrawn). Thus, we could see the final auction clearance rate fall further:
Sydney’s preliminary auction clearance rate of 47.3% was way under the 64.4% recorded last weekend and even below the 54.3% final auction clearance rate recorded last year.
Melbourne’s preliminary auction clearance rate of 58.6% was stronger, but it too was well down on last week’s 62.7%, albeit above last year’s final auction clearance rate of 52.1%.
Domain’s auction results were even weaker, albeit based on a smaller sample. Here, the national auction clearance rate collapsed to only 35.3%, with broad weakness across Sydney (37.3%) and Melbourne (35.3%):
Commenting on the results, CoreLogic noted:
This week was set to be the busiest week of the year with 3,203 homes scheduled for auction across the combined capital cities. With the disruption of new policies preventing on-site auctions, the auction withdrawal rate surged over the weekend, with 40 per cent of auctions pulled from the market, up from 7.5 per cent a week earlier. The high rate of withdrawals weighed on the preliminary clearance rate, which dropped to 51.4 per cent; the lowest reading since June 2019…
The surge in withdrawn auctions was anticipated, considering the rising level of uncertainty from both buyers and sellers, coupled with the shift towards remote auctions which may take some time for the market to adjust to. Considering the rapid transition to on-line auction formats, some agents reported technical challenges and connectivity issues; no doubt many of these challenges will be resolved with the benefit of more time to prepare.
Additionally, the number of auction results collected are lower than usual this week as we seek to confirm the status of scheduled auctions, however, as remaining results are collected we expect the number of withdrawn auctions to rise and the final clearance rate to adjust lower.
We also saw a surge in the proportion of properties sold prior to auction, lifting from 22 per cent of the preliminary collection last week to 36 per cent this week…
Looking forward, the coming months are likely to see substantially fewer auctions than normal. Some vendors will choose to convert their listing to a private treaty method, while others will likely pull their property from the market all together until confidence and selling conditions improve…
Overall, we are expecting a substantial drop in new property listings, regardless of the selling method, as buyers and sellers retreat to the sidelines and wait for some certainty to return to their decision making.
With massive job losses anticipated, and the economy facing its biggest downturn since the Great Depression, the property market is facing a significant decline. The only question is by how much?