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Sydney’s August clearance rate hits highest point since start of pandemic

The month of August saw Sydney achieve its highest clearance rate since the start of COVID-19, with the harbour city returning a success rate of 59.7 per cent.

A report by Domain indicates Sydney’s clearance rate edged 1.8 per cent higher throughout the month, taking it to 23.6 percentage points above the 15-year low it hit in April.

“While clearance rates are 11.2 percentage points lower than August last year, they have held in the high 50s for four consecutive months even as auction volumes rapidly track higher post-April’s lockdown,” Domain senior research analyst, Dr Nicola Powell said.

Clearance rateCollection rate
Sydney59.7%97.5%
Houses62.5%97.8%
Units53.3%96.7%
Source: Domain

The volume of properties going to auction also increased significantly on the months prior, and the same period in recent years. In fact, August volume saw Sydney enjoying its highest number of homes auctioned in the month of August since 2015.

“Over August, 2687 homes went under the hammer, an increase of 22.7 per cent from July and 27.3 per cent compared to the same month the year prior,” Dr Powell explained.

“This is the highest number of homes auctioned since pre-pandemic, which is a strong contrast given this is comparing to the autumn selling season.

“The performance of the auction market in recent months demonstrates the resilience of the housing market given the devastating impact the pandemic has had on the economy,” Dr Powell said.

With a clearance rate of 59.7 per cent, Sydney is tracking just below the 60 per cent benchmark for inflation.

“Below 60 per cent indicates the market could have lower demand, and price moderation is likely,” Dr Powell noted.

“Given clearance rates have dipped just below this threshold, it suggests further mild price falls are ahead.”

SYDNEY REGION PERFORMANCE
RegionClearance rateAnnual percentage point change, clearance rateVolumeAnnual change, volumeReporting rate
Canterbury Bankstown68.5%-6.1%17140.2%98.2%
Central Coast64.5%14.5%61-38.4%101.6%
City and East55.7%-11.8%46622.3%95.5%
Inner West61.0%-17.7%42454.2%98.6%
Lower North Shore63.8%-16.1%24812.2%98.0%
North West61.2%-9.1%27941.6%97.8%
Northern Beaches66.8%-13.1%20613.8%96.6%
South60.0%-9.5%32130.5%98.1%
South West52.1%-8.6%13919.8%100.7%
Upper North Shore55.3%-19.2%20135.8%93.5%
West49.7%-8.2%16738.0%98.8%
Source: Domain

The withdrawal effect

Dr Powell went on to remark the initial ban on public auctions as part of COVID-19 social distancing measures in March and Aril had resulted in a spike of property withdrawals, which impacted the clearance rate.

That withdrawal rate is now revising downwards towards the national average.

“Removing all of the withdrawn auctions from the scheduled auction count reveals that from March through to August, the total number of homes going to auction has remained relatively the same compared to the same six months last year, down a marginal 2.1 per cent,” Dr Powell said.

“This highlights the fact that, while the most recent months have seen a huge uplift in homes auctioned, when averaged out across the six months they have remained similar.”

Meanwhile, many properties are finding buyers prior to auction day.

“Based on the decade average, roughly one-quarter of homes find a buyer before the auction hammer falls. This trend has risen in recent months, and is now at 26 per cent,” Dr Powell said.

“The proportion of scheduled auctions selling prior has been elevated since prior to the pandemic, although the coronavirus crisis did accelerate this trend.

“For some areas it could signal that the buyer pool is not deep enough for a competitive auction, or vendors are being attracted to a quick sale given the changing health and economic outlook, or it could be a new hybrid method of selling that hinges on a strong auction marketing campaign sealing a quicker sale.”

The month also saw median auction prices decrease slightly. Houses across Sydney decreased 1.5 per cent from July to $1.455 million, while the median auction price for units decreased 2.2 per cent to $880,000. 

“Based on a three-month average, house auction prices have ticked marginally higher while unit auction prices dipped marginally,” Dr Powell said.

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Cassandra Charlesworth

Cassandra Charlesworth is a features writer for Elite Agent Magazine with over 15 years’ journalism experience in metropolitan and regional newsrooms. She has a specialist interest in real estate, tech disruption and a good old-fashioned “yarn”.