CoreLogic’s preliminary auction clearance rate lifted to 62.7% over the weekend, with both Sydney (61.6%) and Melbourne (64.6%) firming:
It was the third consecutive week that preliminary clearance rates were above 60% at the national capital city level:
However, auction volumes remain depressed, with the number of homes taken to auction over the weekend (2,155) -28.6% below the same weekend last year (3,019).
CoreLogic research director Tim Lawless believes the decline in auction volumes is preventing sharper price falls:
“We are still seeing substantially fewer auctions than a year ago which lines up with a broader trend where the number of new listings added to the market remains remarkably low for this time of the year as many prospective vendors stay on the sidelines through the downturn”.
“I think a lot of industry professionals are probably hoping for a late start to the spring, but we’re coming into the final month, and we’re not seeing any evidence that new listings will pick up”.
“This is a good thing in some ways as it’s probably helping to keep the floor under housing prices to some extent or stop the market from moving through larger declines”.
“It shows there’s no real distress of listings in the market, no panic selling or dumping of stock or anything like that. It looks like vendors or prospective vendors are simply willing to wait this out until selling conditions improve.”
Meanwhile, buyers agents believe clearance rates have rebounded because vendors are being more flexible on prices and are increasingly willing to meet buyers’ lower offers:
Michelle May, of the eponymous buyers’ agency, said sellers now have more flexibility on price…
“The closer we’re getting to Christmas, people are feeling that pressure. They want to get something locked in before the end of the year. They’re worried that they’re going to lose more buyers because of the interest rate hikes.”
This increased the appeal of a “bird-in-the-hand scenario” among sellers…
“The people that do need to sell are meeting the market, and they’re setting realistic reserves, and they’re either meeting the reserve, getting a little bit over, a little bit under” [Buyers’ agent Peter Kelaher, of PK Property, said]…
Buyer’s advocate Wendy Chamberlain, of Chamberlain Property Advocates, has noticed that vendors are meeting the market more often.
“Vendors have basically seen six months of interest rate rises and how that has affected buyers and buyer sentiment in the market, and realising they’re going to have to be realistic about where the property prices sit”…
Ultimately, how far Australian house prices fall will depend on the aggressiveness of the Reserve Bank of Australia’s (RBA) monetary tightening, given mortgage rates are the key determinant of borrowing capacity.
That said, there are few signs of forced sales, which suggests prices should continue to fall in an orderly manner until the RBA is done hiking. I am tipping a turning point in the second half of 2023.
