Nervous buyers abandon sinking Australian housing market

CoreLogic has released its final auction results for last weekend, with the nation’s clearance rate plummeting to just 54.8% – the lowest result since late July 2020 during the depths of the pandemic:

Australian auction clearances

Auction clearances were weak everywhere other than Adelaide.

According to CoreLogic:

Continuing the downward trend seen since midFebruary, last week’s combined capitals clearance rate fell to its lowest level since late July 2020 (54.1%), when Melbourne was experiencing its second COVID wave. With 54.8% of auctions held reporting a successful result, last week’s clearance rate was 3.3 percentage points below the previous week’s rate (58.2%) and well below the rate recorded this time last year (73.6%)…

Down 6.4 percentage points from the previous week (58.8%), last week’s [Melbourne] clearance rate marked the lowest rate since early September 2021 (43.8%), with 52.4% of last week’s auctions returning a successful result. This time last year 68.8% of auctions held were successful…

After recording the lowest clearance rate since April 2020 (50.9%) the week prior (53.3%), Sydney’s clearance rate rose one percentage point last week to 54.3%. This time last year, 74.1% of the 745 auctions held were successful…

With interest rates on the rise and consumer sentiment continuing to fall, it’s likely the clearance rate will continue to reflect the challenging selling conditions.

Auction clearance rates have traditionally been a good leading indicator for house price growth across Sydney and Melbourne.

Thus, the plunge in clearance rates across both markets is pointing to accelerating price falls:

Auction clearances versus prices

The great house price correction has well and truly begun.

How deep it goes will depend on how aggressively the Reserve Bank hikes interest rates.

Unconventional Economist

Comments

  1. Hugh PavletichMEMBER

    China …

    China Home Prices Drop for Ninth Month as Demand Stays Weak … Bloomberg

    https://www.bloomberg.com/news/articles/2022-06-16/china-home-prices-drop-for-ninth-month-as-demand-remains-weak

    Bloomberg News
    June 16, 2022, 1:37 PM GMT 12
    Updated onJune 16, 2022, 2:17 PM GMT 12

    China’s home prices fell for a ninth month in May, signaling demand remains weak despite increased government support for the slumping property market.

    New home prices in 70 cities, excluding state-subsidized housing, dropped 0.17% last month from April, when they slid 0.3%, National Bureau of Statistics figures showed Thursday.

    The figures suggest that China’s real estate sector is far from a rebound amid a worsening job crisis and weak economic recovery. Chinese households have turned to hoarding cash this year, a sign that people are bracing for tougher times even as some cities emerge from crippling Covid lockdowns.

    Still Down … read more via hyperlink above …

  2. BornwildMEMBER

    Interesting situation here in Brisbane. Feels like it was only a month ago when it appeared everything on the market was going to Auction. Just had a look on Realestate.com now – and the “For Sale, Sale by Negotiation, Contract Crashed, Submit Offers” are back and better than ever. Buyers seem to have vanished.

    • Ronin8317MEMBER

      In NSW, the state government is set to remove stamp duty and replace it with a land tax. The ‘punter’ will wait until it comes into effect. Furthermore, when the ALP will romp back into power on a mandate to repeal the ‘unfair tax on the family home’, they’ll end up pay neither stamp duty or the land tax.

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