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Clearance rates sink to pandemic lows as vendors hold firm on prices
Auction clearance rates have slipped to their weakest levels since the COVID-19 lockdowns, with affordability pressures sidelining buyers while many vendors refuse to accept lower offers.
New data has shown that preliminary auction clearance rates have continued to hang at lows not seen since COVID-19, as buyers continue to grapple with affordability constraints.
Cotality’s data showed that the combined capitals recorded a preliminary clearance rate of 49.2 per cent, marking their second consecutive week below 50 per cent.
Given that the gap between the preliminary and final results has averaged 5.0 percentage points in the past month, Cotality projected the final clearance rate to settle in the low 40 per cent range once again.
Meanwhile, auction volumes continued to decline, with 1,771 homes going under the hammer, a 5.8 per cent decrease from the previous week.
According to SQM Research, which used a slightly different measure to Cotality, preliminary clearance rates were at 31.9 per cent last week, similar to those seen during 2008’s global financial crisis (GFC).
Cotality’s head of research, Gerard Burg, said that the market had continued to soften as a result of a combination of higher interest rates, affordability constraints, cost-of-living pressures and tax policy changes.
“An increasing number of properties withdrawn for auction or sold prior suggests a growing caution among vendors, who are unwilling to test the auction market,” Burg said.
He said that the most immediate comparison of rates so low was during April and May 2020, in the early stages of the COVID-19 lockdowns.
According to the data, Melbourne saw a slight decline to 50.2 per cent from 50.6 per cent, its softest early outcome since early September 2021, when the city was facing strict lockdowns.
Sydney’s early clearance rate was relatively stable, decreasing by 0.1 percentage points to 47.3 per cent, representing the weakest early result since the week ending 19 April 2020.
Brisbane saw the lowest early clearance rate of any city, with 39.3 per cent reporting a successful outcome, just a 6.0 percentage-point lift on the previous week.
In Adelaide, the preliminary clearance rate rose to 68.7 per cent, the strongest early result in five weeks.
Among the smaller capitals, Canberra held 47 auctions, with 39.5 per cent successful, Perth recorded 13 with four sold, and Tasmania held none.
Around 1,800 auctions are scheduled this week, a small step-up from last week, with volumes reducing to 1,540 the week after.
Burg said that vendors had been unwilling to accept substantial declines in property prices, which may be reflected in the weaker clearance rates, with a larger number of homes failing to sell.
“Vendors will have to evaluate whether they accept a lower price in the near term, or hold on until the cycle turns and sell later,” he said.
“We are seeing a decline in the number of new listings in the Sydney market, which may suggest a pullback in the number of people looking to sell in the coming months.”
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