Auction results continue to trend lower as Sydney records lowest clearance rate
by Cameron Kusher Core Logic 16 November 2015
Auction results are most relevant to the Sydney and Melbourne housing markets where auction sales comprise slightly more than one third of all dwelling sales.
Auction clearance rates are one of the most widely reported housing market statistics, however the reality is that most homes actually don’t sell at auction; they sell via private treaty. The only capital cities where auctions comprise more than one third of all sales is Melbourne and Sydney, where, over the first seven months of the year, auctions accounted for approximately 35% of all home sales. In Perth, auction sales comprised only 1.9% of all sales, 2.9% across Tasmania, 6.4% in Brisbane and just over 11% in Adelaide.
% of all dwellings sold by auction, Feb-Jul 2015
With auctions comprising a reasonable proportion of sales in Sydney and Melbourne, and to a lesser extent, Canberra, the direction of clearance rates can be a useful and timely indicator of housing market conditions in those markets. In the other capital cities, auction results are typically much lower and are generally more indicative of conditions in the premium housing market where most of the auctions tend to be held. In these markets, private treaty indicators such as the average level of vendor discounting and average selling time are more relevant for understanding the balance between buyers and sellers.
Avg vendor discounting Avg days on market
The broad trend in clearance rates is downwards, with the weighted average trending consistently lower since peaking over the last week of March this year at 82% to reach 61% over the past two weeks. Sydney’s clearance rate reached the lowest reading since March 2013 last week with an auction clearance rate of 58%. Melbourne’s clearance rate has also been trending lower, but has showed more resilience than Sydney’s. The clearance rate across Melbourne’s market has been below 70% over the past three weeks, but has held around the mid to high 60% mark.
Weighted average clearance rate, combined capitals