The collapse in the nation’s auction market rolled on this weekend, with the combined capital city preliminary clearance rate plunging to just 47.4%, its lowest reading since April 2020 during the depths of the COVID-19 pandemic.
Source: Cotality
“While the preliminary clearance rate has been holding below 60% over ten of the past 12 weeks, this was the first time we have seen the preliminary clearance rate fall below 50% since the early stages of the pandemic”, Cotality noted.
“Over the past four weeks, the average revision rate between the preliminary clearance and final auction clearance rate has been -5.5%, suggesting the final clearance rate could be in the low 40% range once finalised on Wednesday”.
In Melbourne, 50.6% of auctions have resulted in a successful sale so far. This was 7 percentage points lower than last week’s preliminary clearance rate of 57.6% (revised down to 51.9% in the final numbers) and was Melbourne’s lowest preliminary clearance rate since the first week of September 2021 (44.5%), during Melbourne’s 6th period of COVID lockdowns.
In Sydney, 47.4% of auctions have sold so far, 5.4 percentage points lower than a week ago (52.8%, revised down to 47.2% in the final numbers). Sydney’s result was in line with the combined capitals’ average but the lowest preliminary clearance rate since the week ending 19 April 2020.
Only one-third (33.3%) of Brisbane auctions have reported a successful result so far, and this weekend was the fifth straight week in which the preliminary clearance rate has been below 50% across Brisbane.
As illustrated below, auction clearance rates are one of the best leading indicators for dwelling values:
Therefore, the continued collapse in auction clearance rates is pointing to an accelerating correction in home values.
