January marks a slowdown in commercial auction transactions for the commercial sector. In the week ending 20th of January 2017, there were no auctions to report. In the same week of January 2016, there was 1 sale cleared at auction worth $5.57 million.

With no auctions this week to contemplate, it is a good opportunity to review the national sales numbers and transaction volumes over 2016.

Graph 1. presents the combined number and value of auctions at each quarter in 2016.

Combined number and value of auctions at each quarter in 2016

Comparing the volume of transactions with the combined value of transactions indicates that values are largely tied to volumes, perhaps more so than fluctuations in the price of properties themselves.

The exception is in Q4 2016, where the quarterly value of transactions fell 8% while the number of auctions in the quarter increased 9%.

Volumes and values experiencing similar growth rates might also indicate that the auction sale method is typically employed for smaller commercial assets, in size and value. In smaller asset classes, the price band may not be as diverse.

The total value of commercial auction transactions captured by CoreLogic in 2016 was $2.98 billion, which is 16% lower than the $3.55 billion reported by CoreLogic over 2015. Again, this is partly due to a lower volume of sales in 2016 (1,678) than in 2015 (1,903), which represents a 12% decline in volumes. The average auction clearance rate for 2016 was 62.23%, which is slightly lower than the 66% average over 2015.

 

Eliza Owen
Commercial Research Analyst