Australia’s capital city auction market has slipped to its weakest preliminary result in years, as vendors shy away from testing a jittery housing market under the hammer.
Cotality’s latest figures have revealed that last week, only 47.4 per cent of auctions across the combined capitals recorded a sale, the lowest preliminary result since the final week of April 2020.
The headline number caps a run of softer outcomes, with the combined capitals clearance rate now sitting below 60 per cent in 10 of the past 12 weeks.
Almost a quarter of all scheduled auctions – 23.6 per cent – were cancelled before the big day, while nearly half of properties (48 per cent) changed hands in pre‑auction negotiations.
In the end, only 225 of the 645 auctions conducted resulted in a sale under the hammer.
Fewer homes heading to auction
The weakening clearance rate is being accompanied by a noticeable step‑down in the number of homes being offered for auction.
Across the capital cities, 1,869 properties were scheduled last week, 10.8 per cent fewer than a week earlier and 6.7 per cent below the same period last year.
“That made it the fifth consecutive week auction numbers have come in below year‑ago levels,” Cotality economist Annabelle Mezieres said.
Cotality expects the pipeline to thin further as winter sets in.
“Auction volumes look set to ease further over the coming weeks, partly a seasonal trend but also likely in response to weaker selling conditions. Around 1,800 auctions are scheduled this week, dropping to less than 1,500 the following week,” Mezieres said.
Confidence rattled by rate hikes, geopolitics, and the budget
Cotality research director Tim Lawless said clearance rates had already been trending lower as rate hikes worked their way through household budgets.
“We have seen a recent acceleration in the downwards trend, but we were seeing clearance rates coming down in line with higher interest rates, with a crisis in confidence amid the Iran war and higher inflation,” he said.
He said that the federal budget had added to the sense of unease among sellers and buyers.
“I think it’s fair to say that post‑budget, we’ve probably seen a further blow to confidence that is seeing clearance rates fall even further,” Lawless said.
With fewer bidders competing and more auctions either withdrawn or negotiated early, Lawless said that the slowdown would likely feed into price outcomes over coming months.
“I think absolutely, we should expect there’s going to be a further loss of momentum in the pace of growth in housing values,” Lawless said.
He said people looking to sell their homes needed to be “quite realistic” about what the market would be willing to pay.
Yet he said that the current conditions represented a rare period in which purchasers held most of the bargaining power.
“For buyers, they’re back in the driver’s seat in many ways; they’ve got more stock to choose from,” he said.
Capitals broadly softer
The national retreat is playing out differently across the individual cities but with a generally weaker tone.
Melbourne held 910 auctions last week, around 6.7 per cent fewer than two weeks earlier and 1.8 per cent below the same time last year.
Its preliminary clearance rate fell from 57.6 per cent to 50.6 per cent, the softest early reading since September 2021, when the city was in its sixth COVID-19 lockdown.
Sydney saw volumes step down to 645 auctions, a fall of 17 per cent week on week and 17.1 per cent year on year, while its preliminary clearance rate slipped from 52.8 per cent to 47.4 per cent – its weakest early result since the week ending 19 April 2020.
Brisbane posted another subdued outcome, with a preliminary clearance rate of 33.3 per cent from 142 auctions.
Volumes there were unchanged on the week but 6.6 per cent lower than a year ago, and the city has now recorded five straight weeks with clearance below 50 per cent.
Adelaide’s early clearance rate came in at 40 per cent, its lowest since May 2020, from 91 auctions.
The ACT results improved modestly, with the preliminary clearance rate edging up to 47.1 per cent, 1.4 percentage points higher than a week earlier.
Perth remained quiet, with just 16 auctions held and 40 per cent clearing, while Tasmania had no scheduled auctions.
[Related: Mortgage demand in ‘significant decline’]
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