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Auction clearance slump keeps buyers in the driver’s seat
Buyers have kept their negotiation power high after auction clearance rates fell to a 10-week low last week, while volumes dropped by more than 22 per cent.
New data showed that the preliminary clearance rate across the combined capitals fell to 50.3 per cent last week, from 54 per cent the previous week, marking a 10-week low.
Cotality’s Market Indicator Summary also showed that volumes dropped by 22.4 per cent from the week before, with 1,428 homes going under the hammer.
Cotality economist, Annabelle Mezieres, said the weakness in clearance rates was felt nationwide and consistent with softer underlying selling conditions.
Nationally, 274 properties passed in and 236 were withdrawn last week.
Mezieres said vendor price expectations remained above what buyers were willing or able to pay, while purchasers continued to hold all the bargaining power.
“Vendor expectations have not fully adjusted to the current market conditions. This is also typical of a market in which buyers have more choice and greater negotiating power,” she told SPI.
Victoria to see a turn
Across the country, Melbourne’s clearance rate fell 7.5 percentage points to 48.8 per cent, its lowest since September 2021.
Just 286 auctions were scheduled during the AFL Grand Final week, 69 per cent fewer than the previous result.
Mezieres said that Victoria’s reserve price disclosure laws, set to start on Thursday, may change how buyers and sellers approach auctions, with vendors likely to set reserve prices higher.
“Rather than waiting until auction day to assess buyer interest and finalise their reserve, vendors will need to commit to a figure at least seven days earlier, potentially leading to a higher margin for caution,” she said.
Additionally, she said some vendors could move away from the auction channel altogether if they believed price disclosure would impede their negotiating leverage.
Further, she said greater visibility around reserve prices may encourage more pre-auction offers.
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“Buyers will have a clearer indication of the vendor's expectations and may choose to negotiate directly rather than compete through the auction process,” she said.
Across the country
According to the data, Sydney held the highest number of auctions, with 790 homes going under the hammer - up 39 per cent on the previous week and the city's busiest week since the final week of May.
The city’s early clearance rate fell just 0.6 percentage points to 53.6 per cent.
Brisbane saw the preliminary clearance rate rise 5.1 percentage points to 42.6 per cent, while the city held 144 auctions, down 18.2 per cent on the previous week.
In Adelaide, 103 homes went under the hammer, down slightly on the previous week, while just 39.3 per cent of auctions were successful, a decrease of 18.9 percentage points on the prior week.
Canberra’s early clearance rate rose by 3.7 percentage points to 53.8 per cent, while the city held 82 auctions, an increase of 46 per cent from the week before.
There were 21 auctions held in Perth, recording a preliminary clearance rate of 42.9 per cent, while just two were held in Tasmania.
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