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Melbourne’s auction market edges towards rebound as sellers rethink pricing
Last week’s early clearance rates signalled a possible rebound, with Melbourne leading the way as “nervous” vendors appear to adjust their price expectations for cautious buyers.
New data has shown the preliminary clearance rate for the combined capitals lifted to its highest in 11 weeks last week, with Melbourne leading the results.
According to Cotality’s Market Indicator Summary for the week ending 9 August, preliminary clearance rates rose to 55.1 per cent last week, after a low of 47.4 per cent for the week ending 21 June.
Melbourne led the potential bounce-back with a clearance rate of 60.8 per cent, rising above 60 per cent for the first time since the week of 24 May, and up from 59.6 per cent a week earlier.
The city saw a total of 654 homes going to auction, up 17 per cent on the week before, though still 11.9 per cent below a year ago.
Cotality’s head of research, Tim Lawless, said the Garden City still marked a relatively low result compared to its ten-year average of 68 per cent.
“I would be very surprised if Melbourne home values started to stabilise or move into a recovery just yet,” he told SPI.
“Clearance rates would need to rise further than this and advertised stock levels are still about 8 per cent above the five-year average for this time of the year.”
However, he noted the city’s clearance rates had been improving as fewer homes were passed in, suggesting a better balance as more vendors adjusted their price expectations lower for buyers.
Barry Plant Taylors Lakes and St Albans director and auctioneer, Andrew Koulaouzos, said he had recently seen strong buyer demand, with two auctions over the weekend selling for solid prices.
“Throughout the course of the campaign, I had 70 groups go through each property, whereas in previous weeks or even months, I should say, probably numbers were a bit on the lower end,” he told SPI.
Koulaouzos said while buyer confidence had been impacted by this year’s interest rate rises, prospective purchasers were starting to realise there was less supply going to the market.
“They’re now thinking, ‘hang on a second, there’s less supply. And if we don’t react, we might miss out on the next one and continue to miss out’.”
On the other hand, Koulaouzos said sellers had become increasingly nervous about pricing, given recent media reporting on price declines, as well as recent buyer sentiment.
“Obviously people are still concerned about cost of living, which means maybe they're concerned about buyers not being able to have that affordability to stretch what they were capable of doing,” he said.
“Vendors are still concerned. I think they're still thinking that their price expectations aren't going to be met with them by demand.”
Sydney followed Melbourne in the data, recording an early clearance rate of 57 per cent, the highest in four weeks and above the 49.7 per cent recorded the week prior.
In Brisbane, just 38.1 per cent of homes successfully sold under the hammer, down on the previous week’s 42.0 per cent result.
In the smaller capitals, Adelaide’s preliminary clearance rate fell to 46.8 per cent, its lowest in five weeks, while Perth held nine auctions, recording no successful results so far, and Tasmania held none.
According to Cotality, fewer vendors were choosing to sell by auction, with auctions accounting for 26 per cent of new listings in the first week of August, down from 40 per cent in late March.
Koulaouzos said more vendors were questioning whether auction was still the best method, but it should ultimately come down to property type and level of supply within the surrounding market.
“In our postcode, there’s only a handful of homes available. So at the moment, auction’s definitely still the best way to go. And vendors, obviously through education, understand that,” he said.
Additionally, he said appraisals had picked up over the last couple of weeks after falling in June and July, but only time will tell as to whether there will be a strong spring selling season.
“The rumours on the ground are that interest rates will probably only go up one more time this year, if they go up again, so that gives people confidence,” he said.
Similarly, Lawless said significant lifts in buyer demand might only come when sentiment improved, and expectations for a rate cut grew.
“Spring typically sees a seasonal upswing in fresh listings coming to market, but I suspect vendors will be less active than usual through spring this year given the softer market conditions.”
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