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Auction markets diverge as Melbourne signals rebound, Sydney slips behind
Auction conditions have split across the two largest markets, with Melbourne recording a lift in preliminary clearance rates while Sydney’s recovery stalled.
New data has shown that Melbourne’s preliminary clearance rate has surged to its highest in two months, while Sydney’s result fell despite recording a solid bounce-back the week before.
According to Cotality’s Market Indicator Summary, 59.6 per cent of Melbourne auctions successfully cleared, recording its highest preliminary clearance rate since the week ending 24 May.
Meanwhile, in the Harbour City, the preliminary clearance rate fell to 49.7 per cent after reaching 56.1 per cent the week before.
Across the capitals, the combined clearance rate rose 1.1 percentage points last week to 53.6 per cent, continuing to rebound from the June low of 47.4 per cent, marking the highest preliminary clearance rate in three weeks.
Withdrawals signal sentiment
According to Cotality’s research director, Tim Lawless, Sydney’s previous early clearance rate of 56.1 per cent appeared to be an anomaly, so the decline last week was from a relatively high base.
“Watching the four-week trend, Sydney’s preliminary clearance rate seems to be stabilising around the low 50 per cent range and the final clearance rate around the high 40 per cent range,” he told SPI.
Lawless noted the city’s 23 per cent withdrawal rate was elevated compared to last year’s average of 16.1 per cent, suggesting it could have played a role in dragging the clearance rate down.
He said that a higher-than-average withdrawal rate signalled vendor and agent confidence had weakened as the number of registered bidders fell away.
“Many vendors will withdraw the auction if interest in the property has been low or they doubt they will reach their reserve under auction conditions.”
As for Melbourne, Lawless said the early result was always volatile and would likely be revised lower once finalised.
“From a historical perspective, clearance rates are still well below the long run average in Melbourne.”
In Melbourne, a lower withdrawal rate was recorded: 15.7 per cent of scheduled auctions were pulled from the market.
Buyers are ‘clocked out’
Real Estate Gym founder, Tom Panos, said he was seeing the lowest level of activity in Sydney that he had seen in his 30-year career as an auctioneer, with “zero registrations” for his properties.
“Through the early 90s, we had the recession, then we had the GFC (global financial crisis), COVID-19, and every correction in between,” he said in a social media video.
“I think this is the lowest level since 1991. [Even then], I was doing two auctions, three auctions – today I’ve got one scheduled.”
Panos said it was particularly surprising as the recent Consumer Price Index (CPI) inflation figure was better than expected, rising 3.8 per cent in the 12 months to June, down from 4.0 per cent in May.
“Normally that sort of news gives some sort of confidence – not this time, people are just clocked out,” he said.
“This tells us that something bigger’s going on. Buyers aren’t just worried about interest rates, they’re worried about confidence, they’re worried about making a decision.”
Smaller capitals deliver mixed outcomes
In Brisbane, the preliminary clearance rate rose to 42 per cent, surpassing 40 per cent after remaining below the threshold for six of the past eight weeks.
Adelaide maintained a 52.6 per cent preliminary clearance rate out of 92 auctions, while the ACT’s result fell 9.2 percentage points to 43.9 per cent.
When it came to the smaller markets, Perth recorded 10 auctions, while Tasmania recorded none.
This week, Cotality said 1,400 homes were scheduled for auction, with about 1,300 expected the week after.
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