The triple whammy of weaker buyer sentiment, rate hikes and rising inflation has spread to Australia’s auction market, sending clearance rates lower over the June quarter.
CoreLogic’s Quarterly Auction Market Review shows 31,439 auctions were held in the three months to June, following the busiest March quarter on record when 23,748 homes went under the hammer.
CoreLogic Research Director Tim Lawless said while auction volumes over the June 2022 quarter were the second highest on record for a June quarter behind Q2 2021, the clearance rate was substantially lower.
Over Q2 2022, 60.8% of reported auctions were successful, down -14.9 percentage points from the same period last year (75.7%), marking the lowest clearance rate for any quarterly period since September 2020 (59.2 %).
“The latest results continue to highlight tougher selling conditions as interest rates rise and consumer sentiment remains low,” Mr Lawless said.
“In the first three months of the year clearances rates held up at about 70% but just as we’ve seen the rate of growth in values slow since peaking in early to mid-2021 the same trajectory has impacted the auction market. The combined capital city clearance rate hit a record peak of 80.0% in March 2021 and has been gradually declining ever since.”
Adelaide recorded the highest clearance rate this quarter (75.0%) followed by Canberra (68.0%), Melbourne (61.1%) and Brisbane (58.7%). Sydney’s clearance rate for the quarter was 57.2% while Perth (46.4%) and Tasmania (41.7%) both came in under 50.0%, although auctions comprise only a very small portion of listing campaigns in these regions.
In terms of auction volume, Melbourne was the busiest auction market, with 13,818 homes taken to auction, followed by Sydney (11,119). Adelaide was the busiest of the smaller capital cities (2,457), followed by Brisbane (2,281), Canberra (1,528) and Perth (211). There were just 25 homes taken to auction across Tasmania over the June quarter.
“After the volume of auctions was consistently higher than a year ago through the first four months of the year, the number of auctions held have been lower compared 2021 since the start of May,” Mr Lawless said.
“The trend towards lower clearance rates has been most visible in Sydney and Melbourne, where housing values are now falling and advertised stock levels are back to above average levels, however clearance rates are also trending lower in stronger markets like Brisbane and Adelaide.
“Seasonally the number of auctions held in winter normally trends lower, however it’s possible this could be amplified this year as the housing market moves into a downturn. Potentially we could see more vendors choosing to sell by private treaty rather than auction as fewer competitive bidders make the auction process less effective at achieving the best possible price.”
Auctions that pass in or are withdrawn are counted as unsuccessful auctions. With selling conditions weakening over the quarter, the combined capitals withdrawal rate rose by 3.14 percentage points, from 9.61% in the March quarter, to 12.75% over the three months to June.
Sydney’s withdrawal rate rose from 12.9% over the three months to March, to 19.4% in the June quarter, with Melbourne’s up a less substantial 1.6 percentage points to 9.6%, with the weaker selling conditions dissuading more vendors.
Sydney sub-region summary
In Sydney, all 15 sub-regions saw auction volumes increase over the June quarter compared to the previous three-month period, although clearance rates were lower. The June 2021 quarter saw both higher auction volumes and clearance rates across all 15 sub-regions compared to the June 2022 quarter. North Sydney and Hornsby held the most auctions this quarter (1,655), and recorded the highest clearance rate (61.9%), while all other sub-regions recorded a clearance rate below 60.0%.
Melbourne sub-region summary
In Melbourne, all but one of the nine sub-regions saw an increase in auction volumes over the June quarter compared to the previous three-month period, while clearance rates dropped across all nine sub-regions. Melbourne’s Outer East region, where 66.7% of reported auctions were successful, recorded the highest clearance rate over the June quarter, followed closely by the Mornington Peninsula (66.6%). Three sub-regions saw clearance rates slip below the 60% mark this quarter (West, Inner and North West).
Highest volume and clearance rates
Reservoir in Melbourne’s north held 255 auctions in the June quarter, the highest volume of any capital city region while 29 of the 31 auctions held in Adelaide’s Ingle Farm sold for a 93.5% clearance rate during the period.
Newcastle and Lake Macquarie was the best performing regional auction market with 62.2% clearance rate from 418 auctions, up from the 60.8% result achieved in March. The Gold Coast was the busiest regional centre with 902 properties going under the hammer in the three months to June.
A full city-by-city suburb analysis, where at least 20 auction results were reported over the June quarter, can be found in the report.
CoreLogic, on average, collects 99% of auctions and auction results each week, providing the most complete and timely assessment of auction activity in the Australian market.
For more information or to download a copy of the report, visit www.corelogic.com.au/reports/quarterly-auction-review.