Just when you thought the nation’s auction market couldn’t get worse, this week’s final auction results hit a fresh low of 42.3%, the lowest result since April 2020 (41.1%) during the height of the Covid-19 pandemic.
Source: Cotality
“The downward trend in clearance rates has been apparent since mid-February, but a sub-50% reading indicates a wide gap has opened between buyer and seller pricing expectations”, noted Cotality.
“Since the commencement of Cotality’s auction results in 2008, clearance rates have been this low across only three periods previously: in 2011 and 2018 as the housing market was navigating a downturn, and during the early onset of the COVID-19 pandemic when the auction dynamic was severely disrupted”.
“Additionally, the 4-week rolling average indicates that the weighted average clearance rate is trending downward, suggesting the decline is not merely due to a slow week but reflects a broader trend that has been unfolding since earlier this year”, Cotality stated.
Clearance rates were weak across all major capital cities, with all tracking below 50%.
While not a major auction market like Melbourne and Sydney, Brisbane has recorded four consecutive weeks of clearances below 40%.
The following chart plots the monthly average clearance rate across the combined capital cities against quarterly dwelling value growth:
Historically, there has been a strong correlation between auction clearance rates and price growth, with the latest downturn in clearances portending further price weakness at the combined capital city level.
The crash in Sydney’s auction clearance rate looks equally nasty and points to further heavy price falls:
While Melbourne’s decline in auction clearance rates is also precipitous, it is a little less so than Sydney’s.
SQM Research managing director, Louis Christopher, gave a blunt assessment of the market on Twitter (X):
“The preliminary clearance rates looked like crap over the weekend; and sure enough the final numbers are about as bad as you will ever see”.
“Market confidence is at the lowest point so far this decade, presuming we strip out the few panic weeks of the first Covid lockdown”.
The Australian property correction looks to be gathering steam.
