Auction clearance rates nationally have risen for the third week in a row, an early sign that the housing market may be close to finding a new balance as sellers reduce their expectations and more buyers emerge.
Listings rose 9 per cent over the previous week, a forerunner to the traditional spring selling season. Despite the greater supply, the preliminary clearance rate hit 61.5 per cent from the 1603 home that were listed for auction.
That result is 2 percentage points better than a week earlier and the first time since June that the preliminary rate has passed 60 per cent, on CoreLogic’s tally.
Louis Christopher, managing director at SQM Research, said there was some evidence that the auction market was starting to level out. Final clearance rates have not declined further since the interest rate increase in July and have actually risen since the August rate rise on SQM’s analysis, he said.
“The market has now found a base of buyers who see value in the market,” Mr Christopher said.
“They are a combination of an increasing number of first homebuyers and an increasing number of investors, who are attracted by the surge in rents, thereby pushing up rental yields and are seeking a hedge against inflation.”
Admittedly, that consolidating group of buyers may be “fleeting” and could depart in the face of further rate increases, Mr Christopher said. Nevertheless, given more rate increases were already anticipated, a pause in the rate cycle could be enough to spur a rally, he added.
As buyers return to the market, sellers have also played their part in helping to establish a new equilibrium, with asking prices waning since February.
“There’s definitely been an adjustment in seller expectations,” Mr Christopher said.
Auction volumes overall were down 12 per cent on a year ago, when the clearance rate was at 70 per cent.
Listings in Sydney jumped close to 30 per cent on the previous week, with the preliminary clearance rate easing to 59.7 per cent from 60.6 per cent a week earlier, according to CoreLogic. Melbourne recorded its highest preliminary clearance rate since May at 65.5 per cent, up from 61.7 per cent a week earlier.
In south-east Queensland, the Ray White Burleigh Group auctioned 21 properties last Thursday. While none of them met their reserve, 60 per cent were sold under the hammer. Sellers have adjusted their expectations, while top-end properties still fetch strong prices.
Among them was the five-bedroom home at 46 Garden Grove, Carrara on the Gold Coast, which sold for $6.68 million.
Ray White auctioneer Mitch Palmer said there was enough depth in the prestige market to take the Gold Coast home to auction.
“A local buyer won it in the end, and we had a huge amount of interest from Sydney and Melbourne buyers as well.”
Mr Palmer said he was still seeing strong migration into Queensland, particularly to the coastal areas.
“Stock levels are still low here on the coast, so the prices are being pushed up.”
Meanwhile, in Melbourne, buyers agent David Morrell, of Morrell & Koren, said scarcity of stock relative to demand was supporting prices at the top-end, a contrast to the broader sentiment of a weakening market.
Evidence of that dynamic was the sale of a 405-square-metre block of residential land in bayside Elwood auctioned over the weekend which went on the market at $3.05 million and was knocked down at $4.265 million, with five bidders in action.
“That’s a fairly good litmus test. Anything good is flying. It’s markets within markets. No one is going to commit to put their property on the market because they’ve got nothing to move to,” Mr Morrell said.
“It’s frozen and so there’s a lot of buyer frustration out there.”
Among the smaller capitals, Brisbane’s preliminary clearance rate was 40.7 per cent, Adelaide was at 71.6 per cent and Canberra hit 63.9 per cent, according to CoreLogic.
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/auction-market-levels-out-as-clearance-rates-improve-20220812-p5b9hz