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Brisbane’s clearance rates plummet to 20%
Brisbane’s auction clearance rate fell to its lowest since April 2020 last week as borrowing capacity continues to be constrained after four rate rises this year.
New data has shown that the auction preliminary clearance rate last week fell to 48.8 per cent, marking the second week in a row where it was below 50 per cent.
According to Cotality’s Market Indicator Summary, 1,781 auctions were held across the capitals, with total volumes over the first six weeks of the season falling to levels not seen since the COVID-19 pandemic.
Brisbane’s clearance rate fell to its lowest level since April 2020, with only 21.4 per cent of auctions achieving a successful sale.
Apollo Auctions’ Marcus Frater said many Brisbane sellers had been refusing to accept buyers’ bids if they were below their reserve prices or not in line with their expectations.
“We do have people there, and we do get a bid, whether it is at a level where it's been within the feedback or slightly around it, sometimes the sellers just don't want to accept it,” he told SPI.
Additionally, Frater said buyers’ confidence was likely impacted by the Reserve Bank of Australia’s fourth hike of this year, which has further constrained borrowing capacity, while another hike could be on the way this year.
“Someone might be approved for a certain amount, there's an interest rate rise or something that affects their situation, and they either have to go back through the process or where they were looking is no longer obtainable.”
Economist Annabelle Mezieres said investors may continue to have more leverage on price than a year ago, but will need to determine whether rental income can offset higher borrowing costs.
“The main challenge for investors will be that changes to taxation policy have provided a significant disincentive,” she said.
“It’s likely investors will be a substantially smaller portion of aggregate demand going forward.”
The preliminary clearance rate in Melbourne rose 54.8 per cent, up 4.2 percentage points from the week before, while 707 auctions were held, more than any other city.
However, Melbourne’s auction volumes are set to fall sharply this week, down 34 per cent on last week, with Cotality suggesting a possible connection to Victoria’s seller disclosure laws likely to officially kick in this week.
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“The timing suggests some vendors may have brought campaigns forward or delayed auction decisions as the industry adjusts to the new rules,” it said.
Sydney’s preliminary clearance rate decreased by 2.8 percentage points to 52.9 per cent, marking the lowest result in ten weeks, while volumes increased drastically to 653 homes following the long weekend.
In Adelaide, the preliminary clearance rate rose to 46.8 per cent, from 41.5 per cent the previous week, with 140 auctions held.
Last week, 66 auctions were held across the ACT, with 36.4 per cent reporting a successful result, its second-lowest preliminary clearance rate this year.
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