CoreLogic revealed that the auction market over the 2018 year to date has consistently slowed down in its latest Property Pulse, noting that clearance rates trended the low 60% range to below 50% in October.
The report highlighted how auction volumes dipped to their lowest level over spring this year — an unusual market state for this period. The months after winter are usually anticipated in the market because they are seen as an opportunity to make the best sale, with an increase in both the number of newly advertised homes for sale and weekly auction volumes. This year, though, while there was a seasonal rise in the number of homes going under the hammer, auction volumes remained at their lowest level over the spring to date period this year, compared to the same eight week period over the past 5 years. Combined capital clearance rate, meanwhile, declined even more with less than half of homes selling at auction over the previous month.
CoreLogic noted that the last time the auction market cooled this seriously was during the last significant market downturn in 2012.
Digging deeper, the property information provider saw the correlation between property values and clearance rates as a timely indicator on market conditions and sentiment.
Across the combined capital cities, 53.9% of units have been successfully sold at auction over the past 8 weeks, while half of the houses listed for auction over the same period have failed to sell (49.4%).
This was similar to the trend in 2017, where units were more successful at auction. While units account for a smaller proportion of overall activity, one cannot discount the fact that the shift is becoming more evident as of late with 4.5% more units selling at auction than houses over the spring season to date. This figure was compared to the 2.3% difference over the same period last year.
Further, volumes and clearance rates alike were significantly higher across both house and unit markets over the 8 week period in 2017, with 12,825 houses and 5,130 units taken to market across the capital cities, with 65.4% and 67.7% selling respectively.
“The lower year on year results is hardly a surprise given home values have been in decline for 12 consecutive months now, and if our weekly clearance rates over the past 4 weeks are any indication it’s likely this will weaken further,” Core Logic stated.
To recall, final results two weeks ago saw only 44% of houses successful at auction, while a higher 51% of units sold across the combined capital cities. The highest clearance rate for the year was back in late February (66.8%).
