Auction clearance rates bounced to a seven-month high across the combined capitals and volumes have risen as sellers adjust to the new market conditions.
Domain’s Auction Report for October 2022 shows that clearance rates across the combined capitals hit 61 per cent, indicating we’re entering a more balanced auction market.
While rates continue to trend lower annually, the expected seasonal spring lift in auction volumes occurred in all capitals, apart from Sydney.
Domain Chief of Research and Economics, Dr Nicola Powell said the improvement highlights that sellers have become more adjusted to pricing their homes to meet the expectations of buyers battling sliding borrowing power and deteriorating mortgage affordability.
“Clearance rates are above 60 per cent across the combined capitals for the first time since April, indicating a more balanced auction market between buyers and sellers,” Dr Powell said.
“Clearance rates have increased for the third consecutive month, providing the biggest monthly jump since February and the highest clearance rate since March.”
Dr Powell said the combined regional clearance rate increased for the third month in a row.
“This is the largest monthly increase since February 2021 and the highest clearance rate since March,” she said.
“Clearance rates in regional Australia have seen a significant improvement, the biggest monthly jump since February 2021.
“These stronger results have been achieved on lower auction volumes compared to last year, this could be helping to support a higher clearance result.”
According to the report, Sydney’s clearance rate increased for the third consecutive month, its biggest monthly improvement since February and the highest clearance rate since March.
However, the clearance rate remains lower over the year, down almost 15 percentage points.
Melbourne saw a jump in its clearance rate for the third successive month, the first time this has happened since March 2021.
October recorded its highest clearance rate since April and the third consecutive month of a rate above 55 per cent. Melbourne is lower annually by 11 percentage points.
Brisbane’s clearance rate increased for the third month, however, it’s seeing a significant annual decline due to unusually high clearance rates last year as a result of a booming property market.
Brisbane is a less auction-centric property market therefore clearance rates can be volatile and is now seeing the performance return to historic standard, Dr Powell noted.
Meanwhile, auction volumes have seen a rise for the second month in a row across the combined capitals but are lower annually.
“Melbourne, Brisbane, Adelaide and Canberra saw a monthly increase in auction activity which is expected in spring,” Dr Powell said.
“However, Sydney declined, highlighting how the downturn is impacting seller sentiment and sale method.
“Volumes are also up for the second successive month in the combined regionals but still remain lower annually.”
The proportion of properties sold prior to auction day increased for the third consecutive month – the highest point since April but remains lower compared to 2021.
“While rising sold priors can mean different things under varied market conditions, it does suggest fewer buyers have placed greater pressure on sellers to accept an offer prior to auction,” Dr Powell said.
House clearance rates continue to outperform units, with the gap narrowing in October according to Dr Powell.
“Sydney and Melbourne followed this trend while Brisbane, Adelaide and Canberra saw unit clearance rates perform better,” she said.
“This aligns to current price trends as units hold firmer than house prices.
“House clearance rates continue to see a more significant annual drop due to the influence of affordability and borrowing capacity.”
Melbourne was the only city to see a positive monthly change in its auction house price and Adelaide the only positive annual change.
Brisbane houses recorded the biggest monthly and annual drop among the capitals, aligning with the accelerating fall in prices over the last three months, however, units fell over the month but have improved annually.
Canberra’s auction unit price saw the only positive monthly and annual change, aligning with the strong unit clearance rate while Adelaide units recorded the biggest monthly and annual drop among the capitals.