Auction rebound points to higher property prices

CoreLogic has released its Q4 Auction Report, which shows the market booming as 2020 drew to an end:

CoreLogic’s Auction Market Review for the December quarter 2020 saw the combined capital city clearance rate continue to strengthen, while auction volumes increased by 44 per cent over the same period.

The combined capital city clearance rate was recorded at 69.4 per cent over the December quarter, making it the best performing quarter of 2020, followed by the March 2020 at 62.5 per cent.

Auction volumes increased by 44.1 per cent over the three months to December, with 20,489 homes taken to auction across the combined capital cities, up from 14,216 over the September quarter.

CoreLogic’s Head of Research Australia, Eliza Owen, says the bulk of this uplift can be attributed to Melbourne.

“65.2% of the uplift can be attributed to the resurgence of auctions scheduled across Melbourne. Vendor activity became pent up during stage four restrictions across the city, leading to a delayed flurry of activity. As restrictions eased we saw new listings soar across Melbourne with people looking to sell, and last year the seasonal drop off in auction activity happened about a week later than we would typically expect, as agents tried to keep up with vendor demand.

“While the three months to December was the busiest quarter of 2020, it was significantly lower than the December 2019 quarter, when 26,923 homes were taken to auction across the combined capitals.

“Based on the momentum that was building in the market towards the end of 2020, along with strong selling conditions and record low interest rates, we would expect auction results to continue on a strong footing into 2021 as volumes ramp up, providing there’s no major resurgence of COVID19 in the community which would serve to dampen the momentum building late last year,” says Ms Owen.

Of the 20,411 auction results collected over the latest quarter, just 8.9 per cent reported a withdrawn result, compared to 18.7 per cent over the September quarter and 31.0 per cent over the June quarter. Of the sold results, 36.8 per cent were sold prior to auction, compared to 42.0 per cent over the September quarter and 47.8 per cent over the June quarter.

Auction clearance rates have historically been a solid leading indicator for property prices in Sydney and Melbourne (but should be viewed alongside mortgage commitments):

As shown above, the rebound in auction clearances points to higher property price growth in Sydney and Melbourne.

Unconventional Economist
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  1. Anecdata : The house a few doors down was on the market for $850K for 2018 / 2019. We’d giggle to the other neighbours about how overpriced it was. The start of 2020 it was reduced to $800K which we still considered to be at least $100K too high . It still wouldn’t sell.

    The owners took it off the market for a little while and now it’s back. I rang the real estate to get the valuation after telling him I was a curious neighbour and he told me it’s now offers over $1.2 M and likely to move much sooner rather than later .

    Totally normal for a house to go up > 50 percent in less than a year , right ?

    • But thats a lovely part of the world, and has Trial bay Gaol just up the hill… It even has a reasonably high median household income for that part of the country @ $53K…

      As for the house, it has everything you need…. like a lift in the middle of the other lounge room……

      looks like a bargain…

      • I’d say there’s definitely more work around here for those who install residential infirm lifts than for those installing residential pole dance kits.

        The average age has to be somewhere north of 70 years young. Only recommended for those with a high tolerance for driving up the road behind a car doing sub 35 kms hour. For some reason I thought the elderly would drive at a respectable speed cause they didn’t want to waste their remaining hours behind the wheel. Not the case at all.

        • according to the census

          The median age of people in Arakoon (State Suburbs) was 56 years. Children aged 0 – 14 years made up 8.6% of the population and people aged 65 years and over made up 30.7% of the population.

          Considering there is only about 50 under the age of 19…..Only 178 of the 417 residents reported any employment, and of them only 88 work more than 35hrs a week….

          Only 15% of the couples in the area have both partners working. 43% have neither working. As only 8% of the population report being unemployed that would suggest a reasonable level of retirement.

          So with 220 men and only 197 women… good luck finding any fun on the side….that doesnt involve wrinkles….

    • Mid-North Coast is going nuts. A workmate is selling his house in Port Macquarie near Lighthouse Beach. It was going to be their ‘forever home’ and he bought it 6 years ago for $700. He’s renovated it and is putting it on the market for auction and the RE Agent reckons they’ll get $2M+ going on recent sales and demand for the area.

      Happy days for him – he will downsize and purchase outright and his wife won’t have to work. All at the age of 51. Nice for some.

      • The Mid north coast has always gone a bit nuts at Xmas time with the influx of terrorists from the cities. Lots of opportunistic sellers hoping to hook a greater fool. This year there is a hell of a lot more greater fools around.

        He could sell it and buy a number of really nice places if he looks around a little further out… being right on the beach isnt worth an extra $1.5M

    • Ugly house. Most Australian houses are ugly.

      Perhaps WFH has made the location more desirable.

      Looks like the owner’s greed will pay off thanks to covid. They’ll be patting themselves on the back but they are just lucky.

      But now they have to find a cheap place to maximise the capital gains. Good luck with that.

  2. Jumping jack flash

    Go go go!
    Watching the super savings, how long before it all gets converted into sweet, sweet debt? There is a 6-month lag at least.