I cannot remember a time outside the early stages of the COVID-19 pandemic when Australia’s auction market was this weak.
This month’s final auction clearance rate, which captures the first three weeks of June, has fallen to just 46% across the combined capital cities, the lowest result since April 2020 during the early pandemic lockdown.
The decline nationally has been led by Sydney, where the final auction clearance rate over the first three weeks in June has also fallen to 46%:
Melbourne’s final auction clearance rate isn’t much better, tracking at 48% over the first three weeks of June:
Cotality has released its preliminary auction clearance rates for this weekend, which posted a success rate of only 49.2% nationally:
Source: Cotality
“This was the second consecutive week where the preliminary clearance rate has held below 50%”, Cotality research director Tim Lawless noted.
“Considering the revision between the preliminary and final auction clearance rate has averaged 5.0 percentage points over the past four weeks, we are likely to see the auction clearance once again finalise in the low 40% range”.
The preliminary clearance rate nationally was boosted by Adelaide and Brisbane, which recorded a bounce in successful auctions.
By contrast, the two major capitals, Melbourne and Sydney, recorded even lower preliminary clearance rates than they had last weekend.
In Melbourne, only 50.2% of auctions reported a successful outcome, down from 50.6% the week prior (revised down to 43.6% once finalised) and the lowest preliminary clearance rate since the week ending 5 September 2021 (44.5%) when Melbourne was enduring its sixth period of strict lockdowns.
Sydney’s preliminary clearance rate fell to 47.3% this weekend, 0.1 percentage points lower than a week ago (47.4%, which was revised down to 41.7% once finalised). This was Sydney’s lowest preliminary clearance rate since the week ending 19 April 2020.
The weakness in auction clearance rates is being reflected in falling prices across Sydney and Melbourne, alongside rapidly slowing price growth across the mid-sized capitals.
As illustrated above, auction clearance rates have historically shown a very strong correlation with dwelling price growth.
Therefore, the latest decline in auction clearance rates into the low-40s suggests that Australia’s nascent house price correction may accelerate.
