With Australia’s housing market now in full correction mode, and values declining across all major capital city markets, vendors have responded by withdrawing their homes from the auction market.
This week’s preliminary auction results from Cotality delivered an early clearance rate of 53.6% across the combined capital cities, the highest reading in three weeks, but still the tenth week in a row it has held below 55%.
Source: Cotality
The chart below illustrates the slight improvement in auction clearance rates since June.
Although the final capital city auction clearance rate has remained below 50% for nine weeks in a row (with this week’s results likely to be the tenth), the average final clearance rate of 47% in July was 1% higher than June’s low of 46%.
In this weekend’s auction market update, Cotality noted that “a lower withdrawal rate is one of the factors supporting the rise in auction clearance rates”.
“The share of auctions withdrawn, at 19.7%, remains elevated against last year’s average of 11.8%, but is down from a recent high of 23.7% over the week ending June 21st”, Cotality said.
Auction volumes are also significantly lower.
“The number of auctions held (1,273) was down 10% week on week, to be 19.2% lower than at the same time last year”, Cotality noted.
“This was the eleventh straight week where auction volumes were lower relative to a year ago, reflecting less vendor activity overall, but also the likelihood that fewer vendors are choosing auctions as a method of sale while clearance rates remain so low”.
Despite the modest rebound in this week’s preliminary clearance rate, leading Sydney auctioneer Tom Panos reiterated that the current market is the weakest he has seen in 30 years after receiving zero bidder registrations for two weeks in a row.
“After 30 years in the auction industry, I’ve lived through recessions, the GFC and COVID. But today feels different”, Panos said in a video posted on Twitter (X).
“Two weeks in a row, zero registered bidders at auction, even after positive inflation news”.
“This is the lowest level of auction activity I have experienced myself. I think this is the lowest since 1991”.
“It’s a reminder that confidence, not just interest rates, is what drives property markets”.
“This tells me that something big is going on. Buyers aren’t just worried about interest rates, they are worried about confidence, policy, and making a decision”.
Panos added that the market has “frozen”.
“When buyers disappear, that’s a signal we can’t ignore”, he said.
To be fair, Tom Panos does work in the nation’s weakest market – Sydney – where values have already fallen by more than 5%. Therefore, his experience isn’t universal across Australia.
Nevertheless, despite fewer vendors listing their homes, overall listings across the combined capital cities continue to rise, up 20.1% on the same time last year, according to Cotality:
Source: Cotality
Reduced buyer demand and turnover, alongside rising listings, does suggest that the market has frozen. It also suggests that home prices will continue to fall nationally.
