Plunging auction market leads house prices lower

CoreLogic has released its preliminary auction results for the weekend, which recorded the lowest national clearance rate of 2022:

Of the 2,119 results collected so far, 67.2 per cent were successful, overtaking the previous week as the lowest preliminary clearance rate recorded so far this year. The previous week returned a preliminary clearance rate of 67.6 per cent, revising down to 63.4 per cent at final figures. This time last year, the clearance rate was a higher 77.7 per cent across the combined capital cities.

In Melbourne, 1,285 homes were taken to auction this week, up from 689 over the previous week, although slightly less than this time last year (1,310). Of the 1,051 results collected so far, 68.4 per cent have been successful, similar to the previous week’s preliminary clearance rate (68.3 per cent), which revised down to 63.5 per cent at final figures. Over the same week last year, 75.1 per cent of auctions were successful.

There were 907 auctions held across Sydney this week, compared to 715 over the previous week and 1,119 this time last year. The clearance rate slipped further week-on-week, with 62.3 per cent of the 703 results collected so far reporting a successful result, after the previous week recorded a preliminary clearance rate of 64.5 per cent, revising down to 59.5 per cent at final figures. Sydney’s final clearance rate has held below 60 per cent for the past two weeks and it’s likely to be the case again this week once the remaining results are collected.

The next chart plots the national clearance rate and shows that it has trended sharply lower over 2022:

Sydney’s and Melbourne’s clearance rates are plotted below and also show a sharp deterioration over 2022, especially for Sydney:

Given auction clearances have historically led prices, the decline in both cities’ clearance rates suggest that Sydney and Melbourne dwelling values – which have already declined for two consecutive months – should continue to fall.