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Auction clearance rates in some markets have fallen to below 50 per cent, as home buyers were scared off by an uncertain economic outlook and a temporary closure of on-site auctions, new research has shown.
Figures released by CoreLogic have shown that restrictions to on-site selling have seen investors look for an alternative way to sell property.
The June 2020 quarter saw 13,783 auctions held, down 27 per cent when compared with the March quarter (18,902), and 24 per cent lower than the June quarter last year (18,104).
Of the 11,956 auction results collected over the latest quarter, 31 per cent reported a withdrawn result, which was significantly higher than the 6.1 per cent withdrawn over the March quarter.
However, the research shows that it was a quarter of two halves as property investors planned the COVID-19 pandemic.
“The first six weeks of the quarter saw withdrawal rates as high as 56 per cent as vendors looked to alternative methods of sale or chose to postpone until conditions improved. By mid-May, withdrawal rates started to normalise as the flow of pre-scheduled auctions eased,” head of research Eliza Owen said.
The month of May saw weekly auction numbers remain below 1,000 across the combined capital cities, reaching as low as 417 over the week ending 17 May.
The decline in auction volumes could be attributed to market conditions, as well as physical bans on on-site auctions.
“The initial market response to COVID-19 was a severe drop in sales and listings across both auction and private treaty sales methods,” Ms Owen said.
“Many vendors who did not have to sell were initially unwilling to take their property to market in a time of high uncertainty. This contributed to a fall in sales volumes of -32.4 per cent over April.”
“However, following this initial shock, transaction activity has steadily recovered as social distancing measures eased, and consumer confidence levels experienced a strong recovery in May and June.”