Property sale rates bouncing back and what does that mean for homebuyers?

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Coming off all-time property price highs and months of interest rate hikes from the Reserve Bank of Australia, it’s no surprise that talk of housing market cooldown has started to warm up. 

After seeming to slow down, auction clearance rates have turned back up. With week to week auction results shifting, it can be hard to tell whether what we’ve seen in the last few weeks is representative of a new direction or simply a continual fluctuation.

What’s happening in the housing market?

Reporting from CoreLogic shows that the auction clearance rate (combined across Australia) has recently risen above 60% for the first time since June. While the volume of auctions were down on last year by 12%, activity was up since the week prior - the quietest week for auctions since June.

The clearance rate for capital cities was highest in Adelaide, where it hit 71.6%, bringing up the national average. The lowest rate was in Brisbane, sitting at a preliminary level of 40.7%, excluding Tasmania where only one auction took place (and was successful, for the record). 

While the clearance rate for auctions is considerably lower than it was a year ago, the highs and lows tend to repeat in a fairly consistent pattern. What the past few years have seen, with skyrocketing property prices, is higher peaks and valleys in this same pattern.

A high withdrawal rate continues to drag down clearance rates, with houses coming off the market before they can sell. Perhaps part of this reflects on expectations set too high, with property prices having dropped overall. Owners are still trying to cash in on the sky-high price-tags of 2021 in a 2022 world, and it’s leading to a lot of homes withdrawn before they reach auction - over 25% in Sydney.

What does more auction activity mean for me?

All of these figures can get a little overwhelming - what does it actually mean when it comes to your position in the market? 

Well, if you’re looking to buy, you’re in an interesting position. Buyer sentiment has been weak, speaking generally, but lessened property prices and lower auction turnouts could present a window of opportunity to you if you’re shopping for a new home or investment.

Though you’re entering into a market where the rates have continually raised for the past few months, some lenders have even brought down their fixed rate loans to keep you locked in through tumultuous times.

If you’re looking to sell, there may be some other factors at play than you initially expected. You’ll need to consider lower auction turnouts and perhaps bring down your expectations on the price you were anticipating. Otherwise, you could find yourself stuck in limbo on the market for quite some time.

The recent uptick in clearance rates could be signalling that we aren’t quite through with the housing boom - but far more likely, it’s a part of the kinds of ebbs and flows that tend to occur in the property cycle.

If you’re looking to step into the housing market, check out our home loans hub for more information.

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