For several months, Australia’s auction market has been marking time delivering steady clearance rates.
The national capital city auction clearance has remained in a narrow band, averaging between 65% and 66% for four consecutive months.
This follows a spike in clearance rates in May (71%) and June (70%), which matched the peak in dwelling value growth, as illustrated below:
This weekend should provide the biggest test of 2023 with a year-high 3522 properties set to go under the hammer in what has been dubbed a “Super Saturday” event by CoreLogic:
Sydney, Melbourne, Brisbane and Canberra are all expecting their busiest auction weeks of the year-to-date.
This week’s scheduled auction volumes will surpass 3,000 for the first time since late May 2022 (3,226) and will be the largest since mid-April 2022 (4,035).
Though significantly behind the record auction volumes set in late 2021, this week’s figures are up 43.0% from the 2,463 held the previous week and 83.3% higher than this time last year (1,921).
While auction numbers normally increase during the spring before peaking in late November to early December, the spring selling season this year got off to an early start.
Weekly auction numbers peaked in early July (1,428) before rising 7.8% week-on-week between mid-July and October to date.
In contrast, rising interest rates, falling home values, and uncertain economic conditions resulted in a more subdued upward trend in spring auction numbers last year, with weekly increases averaging 4.7%.
As auction activity has increased, the total capital clearance rate has remained reasonably consistent at around 65% (averaging 65.7% since early July), indicating that the increased supply has been met by a corresponding increase in demand.
Although lower than May’s average of 71%, last week’s clearance rate of 65.7% was 1.7 percentage points higher than the five-year average (64.0%).
Last year at this time, due to poor selling conditions, only 58.8% of auctions were successful.
While this week is expected to be the peak of this year’s spring selling season, an early look at auction data for the next two weeks by CoreLogic suggests that auction activity will stay high as we approach the end of spring.
As shown in the first chart above, auction clearance rates have shown a strong correlation with dwelling value growth.
Thus, the rise in auction volumes, combined with concerns about further interest rate hikes, could see price growth moderate further.
That said, the further acceleration in population growth (immigration) will likely keep pushing prices higher overall.
