Quiet activity for the rest of winter No apparent trend in auction prices

The weakening of the auction market became more apparent in June, as rate increases start to have an impact on market sentiment and demand.

Figures from Domain show that take-up for auctions across capital cities continued its downward trend, with clearance rates holding below 60% for the second consecutive month.

Clearance rates have been declining since February, reaching an almost two-year low over the past month.

The number of homes that went under the hammer also declined for the second month in a row across capital cities and regional areas.

“As interest rates rise, borrowing capacity reduces, home loan serviceability rises, supply builds and affordability constraints impact buyers it is likely we will see an ongoing run of softening clearance rates, auction volumes and auction prices as well as a change in seller price expectations and the availability of stock for buyers,” Domain said.

Here are some interesting highlights from the report in terms of clearance rates:

  • Sydney – The city reported another drop in the clearance rate, marking its fourth consecutive monthly decline. On an annual basis, Sydney recorded the second largest decline in clearance rate. The current success rate in Sydney has not been this low since the COVID-induced hiatus in April 2020.
  • Melbourne – Clearance rates in Melbourne are now at their lowest point since August 2021 after recording declines over the past four months.
  • Adelaide — Similar to how ahead Adelaide is in terms of price growth, the city had the highest clearance rates among all state capitals, maintaining an above 60% level. However, it is worth noting that conditions are also slowing in the South Australian capital.

Location

Clearance rate

Auction volume

Sold at auction

Passed in

Sold prior

Withdrawn
Combined Capitals 53.8% 8,721 4,295 – 19.7% 16.6%
Combined Regionals 48.6% 1,415 542 – 19.7% 20.1%
Sydney 52.1% 3,328 1,565 685 25.7% 25.1%
Melbourne 53.9% 3,703 1,885 1,164 16.0% 12.9%
Brisbane 48.4% 557 232 201 15.2% 9.6%
Adelaide 64.4% 680 389 170 15.6% 7.5%
Canberra 59.6% 368 205 117 19.8% 6.4%
Perth 37.5% 67 12 14 – –
Hobart – 1 – – – –
Darwin 43.8% 17 7 7 – –

Quiet activity for the rest of winter

Property owners are likely to hold off listing their homes for auction for the rest of the winter period.

“Auction volumes are a key indicator in determining the nature of seller sentiment, that is whether a seller is confident that the depth and breadth of buyers will mean the hammer will fall successfully,” Domain said.

All capital cities started the winter period with declines in auction volumes from May. On an annual basis, only Adelaide and Canberra reported an increase in auction volumes.

“This speaks to the overall stronger market conditions seen in Adelaide relative to other cities, both in terms of auction volumes and clearance rates,” Domain said.

Interestingly, auction volumes in June are stronger compared to historical levels. In fact, auction listing activity remained higher than the five-year average by 24.8% in capital cities and 18.4% across regional markets.

No apparent trend in auction prices

Auction prices were vastly different across capital cities and property types in June. For auction prices, Domain only has data on five capital cities: Sydney, Melbourne, Brisbane, Adelaide, and Canberra.

Sydney and Canberra reported price gains for houses, although the former only saw a marginal increase.

On the other hand, Adelaide, Brisbane, and Canberra registered increases in auction prices for units.

“Overall price growth at auction has slowed annually and many cities continue to record monthly falls suggesting the downturn is unravelling across other cities, not just Sydney and Melbourne,” the report said.

Table 5. The median auction price and respective change.

Location

Houses

Units
Median Monthly change Annual change Median Monthly change Annual change
Sydney $1,802,500 0.1% 8.6% $1,065,000 -3.2% -1.0%
Melbourne $1,130,000 -3.4% 5.0% $720,000 -0.7% 2.9%
Brisbane $1,130,000 -5.8% 19.4% $680,000 13.3% 11.5%
Adelaide $750,000 -5.2% 2.7% $575,000 8.5% 21.7%
Canberra $1,090,000 3.8% 6.0% $705,000 0.3% 9.7%

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Data source: Domain

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