Clearance rates fell last week as a record number of homes went to auction in Sydney and Melbourne and buyer numbers thinned in the run-up to Christmas and year-end.
The national 4970 auctions over the week to Saturday – well up on the previous week’s 4153 and the highest number since CoreLogic began tracking them in 2008 – pushed the market to its limit and cut the preliminary clearance rate to 66.6 per cent, the data provider said.
Final clearance rates typically fall from the reported preliminary number as the results of more auctions come in.
In Melbourne, the 2309 scheduled auctions produced an initial clearance rate of 65.3 per cent – down from the previous week’s preliminary reading of 69.4 per cent – in a market that shows vendors are pulling back their price expectations, even in premium areas.
In the inner-eastern suburb of Prahran, the selling agents lowered the price guide on a four-bedroom home from an initial $4-$4.4 million range to $3.9-$4.25 million ahead of Saturday’s auction. It sold for $4,305,000.
“The market’s on life support – we’re in ICU now,” said buyers’ agent Emma Bloom.
Ms Bloom, who represented the underbidder on the 35 Trinian Street property, said such a sought-after location would normally have “droves” of people going through it and the result represented a weaker market.
“It was a lacklustre affair. It should have done better.”
Sales agent Richard Mackinnon, of agency Marshall White, said the result was not lacklustre and the price achieved was right for the market.
“The trouble is we were $4-$4.4 million and then the public typically thinks if it’s $4-$4.4 million, the vendor wants $4.5-$5 million, which wasn’t the case,” Mr Mackinnon said. “The interest in it appeared to be around the $4 million mark.”
Sydney had 1797 auctions scheduled and reported a 63.6 per cent preliminary clearance rate, down from the preliminary rate of 67.3 per cent (subsequently lowered to 63.8 per cent, this year’s lowest) a week earlier.
“It is possible that the final clearance rate may fall below 60 per cent for the first time since August 2020 as the remaining results are collected,” CoreLogic said on Sunday.
With more than three in every five homes selling, some properties are still fetching strong prices, however.
In the lower north shore suburb of Crows Nest, a four-bedroom home sold for $161,000 over the reserve price in an auction in which all five registered bidders participated.
A local couple with plans to renovate the 35 Burlington Street home secured it for $3,111,000.
“All five bidding is quite unusual but Crows Nest is in very high demand because of the new metro train station and great food options,” said Belle Property Cammeray agent Chris Davies.
“This sale demonstrates that buyer competition isn’t slowing down in this area.”
But the market is likely to slow further, as borrowing costs rise further. Last week Westpac raised its fixed-term mortgage rates for the fourth time in less than two months across its Westpac, St George, Bank of Melbourne and BankSA brands.
On Friday, ANZ raised its fixed rates for a third time in less than two months.
Rising fixed rates and increasing affordability problems – mostly due to the hurdle of raising a deposit on ever-pricier homes – were likely to cut clearance rates further, AMP Capital chief economist Shane Oliver said over the weekend.
In an environment in which vendors were becoming increasingly cautious, many are eager to secure a sale before the scheduled auction day, when they know their property will be competing with many others for buyers’ attention.
Ray White, the country’s largest real estate sales network, said it had 1062 auctions scheduled for the week and more than 40 per cent of them had sold prior to auction.
The CoreLogic numbers showed Adelaide was the most successful capital city market, with a preliminary clearance rate of 83.7 per cent, based on the reported results of 309 scheduled auctions.
Canberra, with 217 scheduled auctions posted an initial 75.7 per cent clearance rate and Brisbane, with 305 auctions scheduled, reported a 72.6 per cent preliminary rate.
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/clearances-fall-in-biggest-ever-week-of-auctions-20211212-p59gv0