Auction clearance rates have plummeted by 21 percentage points to 63.4 per cent nationwide since the peak in early October, as the surge in listings swamped the dwindling number of buyers, preliminary results from CoreLogic show.
The clearance rate in Sydney has slumped by 21.6 percentage points to 60.8 per cent and was down by 24.7 percentage points to 62.3 per cent in Melbourne.
When the final numbers are tallied, Sydney’s clearance rate is likely to fall below 60 per cent for the first time this year.
A total of 4,756 homes were taken to auction across the combined capital cities this week, the second busiest auction week since CoreLogic records began in 2008.
This is also the fourth consecutive week when more than 4,000 capital city homes have been taken to auction, something that has never been seen before, said Tim Lawless, CoreLogic’s research director.
“I think it reflects the fact that sellers are really rushing to take advantage of the strong selling conditions before the end of the year,” he said.
“It really shows that the selling environment is changing quite rapidly from a market that was substantially under-supplied to one that’s now virtually normalised and even moving to above average levels for total listing numbers.
“This is great news for buyers who now have more options available, and that’s reflected in the clearance rates which have now returned to the long-term averages of around the low to mid-60 per cent range.”
Record pre-Christmas listings
SQM Research managing director Louis Christopher said auction volumes on the weekend were the highest ever recorded on any weekend before Christmas.
“We’ve recorded 1031 homes scheduled for auction in Sydney, 1599 in Melbourne and 3920 nationally – which are unprecedented this late in the season,” he said.
“Demand tends to drop around this time, so it’s not surprising to see falling clearance rates, but I think given the huge volumes coming through, buyers have been swamped with choice.”
Only 376 properties out of the 1315 collected results in Sydney were sold under the hammer, while 407 were sold prior, 191 were passed in and 325 were withdrawn.
In Melbourne, 662 homes out of the early results of 1778 were sold at auction, while 419 were sold prior, 417 were passed in and 254 were withdrawn.
“It’s challenging out there at the moment; there’s so much stock, which makes it harder to get sales over the line,” said Sydney auctioneer Clarence White.
“A lot of vendors are opting to sell prior to auction and more properties are getting passed in if the reserves are not adjusted.
“I would say probably eight out of 10 vendors have reduced their reserves in the last four to five weeks to get their property sold.”
Despite the weaker showing in Sydney and Melbourne, there are a number of standout sales where buyers paid hundreds of thousands above the reserve, such as the sale of the home at 36 Austral Street, Malabar in Sydney’s east, for $2.505 million – around $900,000 above reserve.
In Melbourne, a townhouse in Parkdale, 23 kilometres southeast of Melbourne also attracted strong bidding and eventually sold for $1.339 million, which was $189,000 above the reserve.
“We were absolutely nervous about putting our property to auction on the weekend before Christmas, but our tenants moved out earlier than expected so we decided to put our property on the market,” said vendor Karen Street.
“We were going to wait till February but our agent Kevin Chokshi from Ray White, suggested we should give it a shot.
“We follow the market so we know that some properties are not selling or getting any bids, so we were quite nervous.
“We’re so happy and relieved to get it over the line and sell it for more than we expected.”
Mr Christopher said the rising COVID-19 cases could prompt the Australian Prudential Regulation Authority to hold off further credit tightening moves.
“We may see a bit of a pause on further intervention from APRA if they believe that the market is slowing,” he said.
“If they did hold off, then I think this would result in a very soft slowdown at the end for 2022.
“This opens up the possibility that the market could actually take off again later in the year if APRA were to stay on the sidelines because I just don’t believe that the actions taken today are enough to create a sustained slowdown.”
Mr Lawless said the surging virus cases was a negative on the housing market, but it was too early to gauge the impact.
“If we do see new lockdowns being imposed or further social distancing restrictions, including the ability to inspect the property or have onsite auctions, there will be a downside for the housing sector,” he said.
“But we’re not expecting that to happen considering the high vaccination rates and there are a growing number of boosters being administered as well. At the moment, I wouldn’t be too concerned about a new wave.“
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/auction-clearance-rates-slump-as-listings-swamp-buyers-20211219-p59irr