Auction activity in Sydney and Melbourne has weakened further, with both major housing markets now recording sales levels reminiscent of the Covid-era slowdown.
Fresh figures from Cotality show Sydney endured its softest week for auction sales in more than six years, prompting some vendors to reconsider whether now is the right time to take their properties to market.
Melbourne has also been hit by the downturn, with auction sales falling to their lowest point in nearly five years.
Cotality research director Tim Lawless told the Australian Financial Review that the average capital city clearance rate — the share of homes sold at auction compared with the number listed — was expected to settle at about 40 per cent.
‘We are likely to see the auction clearance once again finalise in the low 40 per cent range,’ Mr Lawless said on Sunday.
‘Since mid-May, the volume of auctions has held consistently lower year-on-year, indicating cyclical factors are at play as vendors rethink their selling plans amid persistently weak clearance rates.’
Across the capital cities, last week’s clearance rate came in at 42.3 per cent.
In Sydney, the clearance rate slipped by 0.1 percentage points to 47.3 per cent, marking the weakest result recorded since April 2020.
The number of successful auctions in Sydney and Melbourne have dropped to the lowest in more than six years and almost five years, respectively
Despite the clearance rate drop, a home in Glebe (above) sold for $3.23million on Saturday
A total of 642 auctions were listed for last week, equal to the week prior but almost 17 per cent lower than the same time last year.
The clearance rate in Melbourne dropped from 50.6 per cent to 50.2 per cent, the lowest since September 2021.
Adelaide notably kicked the downward trend with its clearance rate jumping from 40 per cent to 68.7 per cent.
The South Australian capital also had more properties go to auction with 115 listed compared to 93 the week earlier.
Brisbane recorded the lowest clearance rate of the capital cities at 39.3 per cent.
However, the figure marked a six-point increase for the Queensland capital, which recorded a 33.3 per cent clearance rate the week prior.
The preliminary clearance rate in the ACT fell to 39.5 per cent form 47.1 per cent and the number of auctions dropped from 63 to 47.
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The total number of auctions around the country similarly fell to 1,771 from 1,880.
The number of scheduled auctions around Australia dropped from 1,880 last week to 1,771 this week
Buyers’ agent Matt Cleverdon watched the sale of a four-bedroom home at 15 Turnbull Avenue in Toorak, inner-Melbourne, for $3,658,000 at auction on Saturday.
The auction boiled down to a contest in the last 11 minutes that saw three bids increase by just $1,000 each.
‘It was a sign of the times. Everyone has a hard limit. Getting $1000 was like taking blood from people. It was just amazing,’ Mr Cleverdon said.
Selling agent Andy Lin of Uniland Real Estate in Sydney had one of his properties go under the hammer in Epping for $4.8million at the weekend, but he said he counted that as the exception.
‘We used to have a 93 per cent clearance rate in this area. Agents, landlords – everyone’s under stress due to the tax reform. We’re lucky the good homes still stand out,’ Mr Lin told The Australian.
His comments were echoed by agents Christina Zhao and Alistair McMillan in Brisbane.
Homes are indeed still selling for millions at auction, despite the apprehension in the market.
On top of the sales in Toorak and Epping, a four-bedroom home in Sydney’s Glebe sold for $3.23million at auction on Saturday after six potential buyers noted their interest.
The notable sale of the home in Glebe (above) at auction was good news for sellers
With successful auctions on the decline, Melbourne-based agent Justin Long observed that more sellers were waiting before listing their properties.
Sydney-based agent Hanna Kim agreed, and noted that buyers were being more conservative with their cash.
Treasurer Jim Chalmers on Sunday urged sellers not to be alarmed by negative data from the housing market.
‘It’s best not to overreact to data from a week or two or even a month or two,’ he said on ABC TV’s Insiders.
‘We saw in 2022 for example, a softening in house prices because interest rates started to go up.
‘It’s not especially unusual to see that sort of volatility in different markets.’
