CoreLogic’s final auction report has been released, with clearance rates tanking to their lowest level since early May 2020 during the height of the pandemic:
Worst auction results since May 2020.
As explained by CoreLogic:
With 51.9% of auctions returning a successful result, last week overtook the previous week (53.0%) as the lowest clearance rate since early May 2020, when just 47.5% of auctions were successful. As selling conditions continuing to weaken across the country, the combined capitals withdrawal rate (14.8%) held around the 15% mark, while a third of auctions (33.4%) were passed in – the highest portion since late January 2020 (34.1%). This time last year 73.0% of the 1,728 auctions held were successful.
The collapse in the clearance rate augers badly for house prices, given their strong historical correlation, especially across Sydney and Melbourne:
Auction clearances typically lead prices.
Separate data released today by CoreLogic shows that sales volumes have fallen sharply, reflecting shrinking buyer demand. CoreLogic expects this trend to worsen as the Reserve Bank continues to hike interest rates:
Through the June quarter, the number of home sales was estimated to be 15.9% lower than a year ago, reflecting less buyer demand. The slower rate of absorption is likely to worsen as rapidly rising interest rates and low confidence dampens buyer activity further, suggesting even as new listings trend lower through winter, total advertised supply is likely to rise through the second half of the year…
Higher levels of advertised supply implies more choice for buyers but also more competition for vendors.
Ultimately, higher inventory levels would likely add further dampening pressure on housing values as homes take longer to sell, motivating vendors to discount their pricing expectations by a larger amount.
We can already see this scenario playing out in lower clearance rates, higher time on market and larger rates of vendor discounting…
Median days on market in Sydney increased to 33 days through the June quarter (from 23 days a year ago) and Melbourne median days on market has increased from 27 days a year ago to 30 days through the June quarter.
The shrinking buyer demand is understandable given they have been conditioned by hawkish forecasts by ANZ, Westpac and the market tipping an official cash rate above 3% by the end of the year.
In turn, Aussies now expect mortgage rates to shoot above 6%, which is a terrifying prospect to any prospective home buyer. They also expect house prices to fall heavily, meaning buyers are afflicted with ‘Fear of Overpaying’ (FOOP).
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also Chief Economist and co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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Are we at war, terrified buyers, what the F. Terrified is been confront by a knife weilding intruder or being told you have 6 months to live. But to be terrified of not buying, think society needs to check its collective consciousness.
You have a stronger constitution than me if the thought of ending up with a few hundred grand of unsecured debt from overpaying in a falling market does not scare you.
I think the overpowering emotion of buyers at the moment is relief as they realise that the RBA appears to be willing to do its most important job.
Which of course is to tighten monetary policy
1. As the economy approaches full employment
2. When fiscal policy has been set to “Scotty and Josh are having a Punch Party and all their mates are invited”
The only fear they have is that they may lose their jobs or their wages may stagnate as a bunch of middle class financial sector minions demand that Albo SMASH and OBLITERATE the tight labour market with scads of cheap and vulnerable imported labour.
Just so they can then howl for the RBA to supply them with cheap credit.
Well, duh.
6k of pure interest per 100k mortgaged.
What’s the average loan? 400k? 24k just in interest. Principle is at least 10k more.
Who wants to afford that?
Perhaps going forward MB can post a rolling total listings chart alongside the sales volume as well? Given the currently divergent markets, you really need to see it state by state.
Are we at war, terrified buyers, what the F. Terrified is been confront by a knife weilding intruder or being told you have 6 months to live. But to be terrified of not buying, think society needs to check its collective consciousness.
You have a stronger constitution than me if the thought of ending up with a few hundred grand of unsecured debt from overpaying in a falling market does not scare you.
Or losing your deposit on a dog box that will never be built. Or that you cannot let to 20 students for cash. Now that is terrifying.
Time for those calming and reassuring words from Reusa, MB’s property guru, that there’s never been a better time to buy?
I think he actually said bi.
Bilingual – one tongue for her, one tongue for him
Ben. Western culture is messed up. And it all starts with the language.
Terrified buyers?
I think the overpowering emotion of buyers at the moment is relief as they realise that the RBA appears to be willing to do its most important job.
Which of course is to tighten monetary policy
1. As the economy approaches full employment
2. When fiscal policy has been set to “Scotty and Josh are having a Punch Party and all their mates are invited”
The only fear they have is that they may lose their jobs or their wages may stagnate as a bunch of middle class financial sector minions demand that Albo SMASH and OBLITERATE the tight labour market with scads of cheap and vulnerable imported labour.
Just so they can then howl for the RBA to supply them with cheap credit.
Terrified Byers.
“Terrified buyers flee collapsing Aussie housing….”
With all the combustible cladding and shonky building quality this has been happening for years.
Terrified buyers? That’s funny…try TERRIFIED SELLERS!
Yeah they’re sh1tting their pants at this slight negative sideways movement!
Isn’t that the Sunday night parties?
Now this is a lovely story!
https://similarworlds.com/fetish/poop/558498-Pooped-my-panties-at-the-beach-A-couple-of-years-a
You know what?
I don’t think I’ll click on that link.
I did, but I should not have.
You are one messed up human.
Well, duh.
6k of pure interest per 100k mortgaged.
What’s the average loan? 400k? 24k just in interest. Principle is at least 10k more.
Who wants to afford that?
Doesn’t bother me. Domain says that the house I bought for $710K in December 2020 is now worth between $900K and $1.2M so nyaaaaah!
Sounds like you need to go buy a europeanised suv.
And a jet-ski.
The RBA giveth and the RBA taketh away
– RBA raising rates ? remains to be seen …………
– But follwowing the ASX rate futures a hike to 2.6.% is actually quite possible.
Perhaps going forward MB can post a rolling total listings chart alongside the sales volume as well? Given the currently divergent markets, you really need to see it state by state.
Devoid of important context otherwise.
– I am still surprised to see clearance rates being so high ……………
Bargains everywhere! (If you take the long view.)