The final week of June saw 66.5% of capital city homes sold at auction, for the third consecutive week of a preliminary auction rate over 60%.
According to CoreLogic, auction clearance rates staying above 60% on a prolonged basis is “a firm sign that buyer and seller price expectations are more balanced and housing prices are finding a new floor.”
While volumes were down week-on-week, Melbourne and Sydney showed the strongest results, exhibiting a preliminary clearance rate above 70%.
However, CoreLogic national auction market commentator, Kevin Brogan, drew attention to the disparity between auction volume year-on-year, comparing the 536 auctions in Melbourne during the last week of June 2019 to the 791 the year before.
“That’s telling us there’s still plenty of stock on the market. Even after the election, people haven’t rushed to list their properties. They’re still talking about cuts in interest rates, the much-anticipated reduction in the serviceability buffer from APRA. And then, there’s the spring reawakening of the market coming up,” he said.
“While these high clearance rates are clearly showing a significant trend, the question is what’s going to happen when the auction volumes really start to ramp up in spring? Are we going to be able to maintain these clearance rates? That will be the true test of confidence,” Brogan added.
The performance across the smaller auction markets was more varied, with Adelaide the strongest at 68.9%, and Perth weakest at just 33.3%.
“Although policymakers look at the aggregated national data, you really need to take into account the different economies of each of the states, capital cities, and regions as well,” said Brogan.
“Sydney was the first to react to the regulatory changes to investment lending and had the deepest reaction in terms of property values. Because it was such a big part of the market, it actually impacted the entire market. Melbourne was a few months behind but played catch up, keeping pace with the falls in value in Sydney. Now, the highly sought-after suburbs in both cities are seeing a bit more resilience creeping in.”
“What we’ll need to watch is how the regions react. Because the things that caused the softening of the market didn’t have as much of an impact there, it’ll be interesting to see if they have much impact on the rebound. I would expect it will also be muted,” he said.