Australia’s auction market collapses, crushing house prices

CoreLogic’s auction results for July are out, with Australia recording an average final clearance rate of just 53% over the month – the worst result since the height of the pandemic in April 2020 (34%).

Sydney’s average final auction clearance rate bombed to 52% in July, whereas Melbourne’s tanked to 54%:

Australian auction clearance rates

Auction clearance rates crashed in July.

As regular readers know, auction clearance rates have traditionally been a strong leading indicator for house prices across Sydney and Melbourne, which are the nation’s auction capitals.

Both cities are telling the same story, with the collapse in their respective clearance rates pointing to further house prices falls:

Sydney and Melbourne auction clearances

Auction clearances point to house price falls.

Mortgage commitments are telling a similar story, with the collapse in mortgage demand across Sydney and Melbourne also pointing to further declines in dwelling values:

Sydney and Melbourne mortgage demand

Mortgage commitments also point to house price falls.

The above is further evidence that “fear of overpaying” or FOOP has taken over from “fear of missing out” or FOMO. Buyers are now choosing to remain on the sidelines as they expect house prices to fall.

The situation will persist so long as the Reserve Bank continues to hike interest rates.

Unconventional Economist
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Comments

    • Display NameMEMBER

      Look don’t get too excited. Yet.

      10% down is a waste of time. Still absurdly expensive and a hand brake on the entire economy. We need at least 30% but more would be better.

      • Central banks have gone from “seeing through the inflation” to “seeing through the recession”
        Are they there to support the markets or initiate the great reset? Time will tell.

    • Paul TuckerMEMBER

      Agreed. Insane house price increases, built largely on the back of government policy, have to stop. Where was all the hand wringing over the rises over the last couple of years? And why should buying property be unlike any other asset-upside only? If you bought at the top of the market, tough. Correction long overdue.

  1. There’s a house knocked down in my area last year now has 3 ” houses” on it. Was sold for 650k and the 3 listed for 500k each earlier this year. Listings disappear for 1 month. Now back 2 weeks ago for 599k each.

  2. The fed broke it. Now, they own it.

    And the banks are ripping higher. Surely if properties were crashing investors would be selling their bank shares, but we have an implicit government put to prevent prices from going down too far. When the put is no longer there that’s when you will get a crash and not before.

    • Absolute BeachMEMBER

      Thanks Arthur, man of Poodles and Jetski’s. Keep watching: the index will blip up on ‘RBA Day’- that is my prediction. Then in the days that follow, the ‘FOST’ sets in. Fear Of Selling Toys. This is defined as the emotion that arises when the owner won’t have the sparkling jewel sitting in the garage (next the Ranger…). And with each ‘RBA Day’ the maths look even worse. Eventually the listing goes on Gumtree and FB Marketplace. And FOST is replaced by words from the Bard:
      ” Neither a borrower nor a lender be;
      For loan oft loses both itself and friend,
      And borrowing dulls the edge of husbandry.
      This above all: to thine ownself be true,
      And it must follow, as the night the day,
      Thou canst not then be false to any man.
      Farewell: my blessing season this in thee!”

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