CoreLogic reported that Australia’s auction markets continued to perform well this week with the preliminary clearance rate climbing to 63.7%. The auction market rebound may signal a larger housing market recovery. However, some analysts believe that clearance rates are only one aspect of the overall picture.
Auction market saw its highest ever final clearance rate since May 2018, when it reached 61.8%. CoreLogic preliminary figures show that this week’s growth was extended by the market, with clearance rates rising to 63.7%.
There were 1,480 homes sold in the combined capital cities. This was lower than the 1,505 that had been auctioned the week before. CoreLogic analyst Caitlin Foono stated that this could indicate that the final clearance rate may be slightly lower.
She stated that “auction activity was higher in the same week last year with 1,849 houses being auctioned returning a clearance ratio of 55.5%.”
Of the capital cities, Melbourne recorded the strongest performance in auction activity — of the 644 homes that went under the hammer, 69.7% were successful.
Below is a table that shows the auctions held in each capital city:
Clearance rates don’t tell the whole story
Is there a sign that the housing market is recovering? Anna Porter, Suburbanite director, said that strong turnout at the auction market wouldn’t necessarily mean a recovery because performance varied between states.
“Outside Sydney and Melbourne, agents sometimes put an auction campaign forward to create a deadline and to create some urgency to get people to make some decisions – rather than with a strong intention of selling on the night of auction,” Porter told The New Daily.
Furthermore, while clearance rates are up, the number of homes being put into auction remains low — during the same time last year, 1,849 auctions took place across the country, considerably higher than this week’s 1,480.
The recent auction numbers could indicate that there is a decrease in housing supply. Jarrod McCabe, Wakelin Property Advisory director, said that these data did not indicate more buyers.
“Supply always flattens in winter — particularly in Melbourne and Sydney — because vendors don’t feel their properties present in the best light and some buyers go dormant,” he told The New Daily, “And vendors who don’t have to sell are also waiting until reasonable prices have been achieved before putting their property on the market.”
Positive indicators for growth
However, there are still reasons to be optimistic — McCabe said analysts would be able to confirm if the market is already on its way to recovery during spring. McCabe indicated that market sentiments would already have been affected by the RBA’s rate cuts and loosening lending rules.
He said, “If we haven’t yet reached bottom of the market we are certainly not far away from it.”
Cameron Kusher, CoreLogic senior analyst for research, believes that the auction figures suggest a reasonable recovery following the drop in 2017. Although he acknowledged that the market is still not in a boom phase, he stated that it has improved substantially over the past year.
“Since the federal election, we have seen a step up in auction clearance rates – and I think that definitely points to a level of confidence in the market that wasn’t evident before the election,” he said.