Despite the escalating health crisis and economic fallout related to coronavirus, this week was the 2nd busiest for auction activity so far this year with 2,539 homes taken to auction across the combined capital cities, returning a preliminary auction clearance rate of 61.3 per cent which is still substantially higher than a year ago when values were falling, but well down on the recent highs.
This week’s preliminary auction results mark a turning point in buyer and seller sentiment, with withdrawal rates rising as vendors think twice about testing the market and buyers losing confidence or choosing to avoid public gatherings.
Prior to this weekend, the year to date withdrawal rate across the preliminary reading was averaging around 5% across the combined capital cities, rising to just over 8% on today’s numbers. The largest proportion of withdrawals was in Sydney where the early numbers indicate 13.5% of auctions were pulled from the market, compared with only 3.9% across Australia’s largest auction market, Melbourne. In all likelihood we will see more vendors choosing to withdraw from the market until confidence and selling conditions improve.
Clearance rates have also taken a hit this week. It is likely that the preliminary auction clearance rate of 61.3 per cent will revise down to below 60 per cent for the first time since mid-2019 as remaining results are collected.
In comparison, the previous week saw 2,274 homes taken to auction returning a preliminary auction clearance rate of 70.6 per cent, before revising down to a final clearance rate of 65.3 per cent. While the clearance rate has fallen, it remains stronger than this time last year when 1,667 homes were taken to auction and a clearance rate of 50.9 per cent was recorded.
The latest results highlight the housing market is being impacted by the social distancing measures and weaker confidence related to the coronavirus pandemic. To date there is no evidence of reduced housing values, however it is clear that transactional activity will be temporarily disrupted coming weeks and months. The extent of this disruption depends on how long it takes to contain the virus and for sentiment to recover.
In Melbourne, a preliminary auction clearance rate of 62.7 per cent was recorded across 1,317 auctions this week, while last week there were 1,201 auctions returning a final clearance rate of 65.6 per cent. One year ago, the clearance rate was 55.1 per cent across 814 auctions.
There were 923 auctions held in Sydney this week, returning a preliminary clearance rate of 64.4 per cent. In comparison, there were 767 auctions held over the previous week and the final auction clearance rate was 68.1 per cent. One year ago, 506 auctions were held and the clearance rate came in at 52.1 per cent.
Across the smaller auction markets, auction volumes increased week-on-week across Brisbane, Canberra, Perth and Tasmania, while Adelaide saw fewer homes taken to auction over the week.