CoreLogic has released its final auction figures for last weekend, which revealed the lowest clearance rate in nearly three months off volumes that were down more than one third from a year ago:
There were 2,170 auctions held across the combined capital cities last weekend, down 38.7% from this time last year (3,539).
The final clearance rate was only 57.6%, which was the lowest result since late August (55.8%).
This poor result was driven by Sydney, whose final clearance rate (58.4%) was 5.3% lower than the previous week and broke a run of four consecutive weeks where final clearances were above 60%.
Sydney’s auction withdrawal rate also increased to 18.6% last weekend. This was the highest withdrawal rate the city has seen since mid-September (20.9%), and suggests vendors are losing confidence.
Commenting on the results, Ray White agent Fiona Hellams blamed the Reserve Bank of Australia’s (RBA) aggressive interest rate hikes, which has stunted buyer borrowing capacity and caused vendors to delay listing their homes.
“There is that doubt in confidence that passes on to everyone” Hellams said. “No one’s putting houses on the market now unless they really want to sell it”.
Ray White NSW chief auctioneer Alex Pattaro concurred noting that “buyers know rates are going to go up again in December” and have “already factored that in with prices”. Similarly, “sellers are factoring in further interest rate rises in their decision-making”.
The above explanations help to explain why auction clearances have ticked higher recently off very low volumes.
Vendors that don’t need to sell are waiting it out, while those that do are showing a greater willingness to meet the lower bids of buyers whose borrowing capacity has been smashed by rate hikes.
These trends should continue as long as the RBA continues hiking rates. Property prices will continue to fall and auction activity will remain suppressed.
