Australia auction clearance rate falls below 50% again

The weighted average final auction clearance rate across Australia's combined capital cities fell to 49.1% last week, the 15th time in 17 weeks the measure has been below 50%.

That was down 3.5 percentage points from 52.6% a week earlier and 22.5 percentage points lower than the 71.6% recorded in the same week a year earlier.

Auction volumes rose as clearance rates weakened. There were 1,841 auctions across the combined capitals, up 16.2% from 1,585 the previous week, though still 30.2% lower than the 2,638 held a year earlier.

Of the 1,841 reported results, 652 properties were passed in, representing 35.4% of all auctions, while 285 were withdrawn, or 15.5%. Passed-in auctions accounted for 69.6% of unsuccessful results.

The pattern may point to a gap between buyer and vendor price expectations. Higher interest rates may also be weighing on demand, with the Reserve Bank of Australia having lifted the cash rate three times this year to 4.35%.

Melbourne leads

Melbourne recorded the highest clearance rate of any capital city last week at 54.2%, despite a 3.1 percentage point fall from 57.3% the week before. The city hosted 918 auctions ahead of the Grand Final long weekend, up 29.3% from 710 and its busiest week since late June.

Even so, Melbourne's clearance rate was 17.4 percentage points below the 71.6% posted a year earlier. The city has now remained above the 50% mark for 11 consecutive weeks.

Sydney held 569 auctions, up 3.8% from the previous week's 548. Its clearance rate dropped 6.6 percentage points to 46.2%, the lowest since early August, and was 25.5 percentage points below the 71.7% achieved a year ago.

In Adelaide, auction volumes climbed 41.8% to 112 from 79 the previous week. The clearance rate slipped to 46.4% from 49.4%, leaving it 35.7 percentage points lower than the 82.1% recorded a year earlier, the sharpest annual decline among the capitals.

Brisbane weak

Brisbane posted the lowest clearance rate among the capitals at 31.4%, down 7.1 percentage points from 38.5% a week earlier. The city had 176 homes taken to auction, up from 169, and has now remained below a 40% clearance rate for 17 straight weeks.

Twelve months earlier, Brisbane's clearance rate stood at 61.9%, 30.5 percentage points above the latest figure.

Canberra was one of only two capitals to improve on the prior week. Its clearance rate rose 10.5 percentage points to 53.6%, the highest since early May, while auction volumes edged down 3.4% to 56 from 58.

That was still 22.4 percentage points below Canberra's 76.0% result a year earlier. Perth also improved week on week, with five of 10 auctions successful, compared with eight of 21 the week before.

No auctions were held in Tasmania.

Outlook shifts

Looking ahead, 1,537 homes are scheduled for auction across the combined capitals this week. That would be 16.5% lower than the 1,841 held last week and 11.4% below the 1,735 held in the same week last year.

Melbourne is expected to see the sharpest drop in activity, with 275 homes scheduled for auction, down 70.0% from 918 last week. The decline follows the Grand Final long weekend, though the figure remains above the 224 auctions recorded in the corresponding week a year ago.

Sydney is set to dominate this week's auction calendar with 904 scheduled listings, representing 58.8% of the combined capitals total. That is 58.9% higher than the 569 held last week, although still 22.3% lower than the 1,164 in the same week last year.

Adelaide has 106 auctions scheduled, 5.4% fewer than last week but 35.9% more than a year earlier. Brisbane is expected to host 144 auctions, down 18.2% from last week and 2.7% lower than a year ago.

Canberra's scheduled volume is set to rise to 86, up 53.6% from last week, though still 25.9% below the level seen a year earlier. Perth has 20 auctions scheduled, double last week's 10 and four times the five recorded in the corresponding week last year.

Two auctions are scheduled in Tasmania after none last week.

Annabelle Mezieres, Economist at Cotality, said higher interest rates may be a factor, as the Reserve Bank of Australia has raised the cash rate three times this year to 4.35%, and each increase reduces how much buyers can borrow.