Australia’s combined final capital city auction rate collapsed to its lowest level this year last weekend, with just 58% of homes taken to auction clearing.
The result points to a sharp slowing in value growth, as illustrated in the chart below:
Sydney’s final clearance rate fell 5.5 percentage points to 57.0%, which was its lowest level of the year:
For the third week in a row, Melbourne’s final clearance rate remained below 60%, with only 56.2% of auctions yielding a successful result.
This was a 2.2 percentage point fall from the previous week (58.4%), and the second lowest result of the year:
The sharp decline in auction clearances across these markets has been met with falling price growth.
The next chart plots the 28-day change in CoreLogic’s daily dwelling values index across Sydney, Melbourne and the 5-city aggregate level:
Sydney’s 28-day price growth has fallen to 0%, whereas Melbourne’s dwelling values are down by 0.3%.
Combined, these two markets have pulled 5-city aggregate price growth down to 0.3%, from 0.8% on Melbourne Cup Day when the RBA last raised the official cash rate.
In his final weekly update of the year, leading Sydney real estate agent and auctioneer, Tom Panos, told viewers to prepare for a “real estate market reset” in 2024:
“What happens at the beginning of every year is called a real estate market reset. It gets reset”.
“Some years I come back and you go to your first auctions and there’s chaos in the street. You can’t get a car spot. Buyers have come out of the woodwork”.
“Sometimes you come back and the tap’s been turned off”.
“One thing is for sure, the first six rate rises did nothing. The next six did something. And the last one on Melbourne Cup Day did the job”.
“That took a lot of buyers out of the market. And it also took out a heap of buyers”.
Certainly, Tom Panos’ observations regarding the RBA’s rate hikes look to have played out, going by CoreLogic’s daily dwelling values index.
The RBA has knocked the wind out of the sails of Melbourne and Sydney housing, with early 2024 likely to record price falls for these two markets.
