Home sales stagnate: weak buyer sentiment causes clearance rates to dip

Sydney harbour

The number of successful auctions drifted down over the June quarter, as rising interest rates, runaway inflation and weak consumer sentiment make for a difficult selling environment.

According to CoreLogic, 31,439 auctions were held across Australia in the three months to June. While this was the second busiest June quarter on record in terms of volume, the rate of successful auctions has dropped significantly. 

Just 60.8% of reported auctions were successful, down from 75.7% over the same period last year. This marks the lowest clearance rate of any quarter since September 2020’s dismal 59.2% figure.

“The latest results continue to highlight tougher selling conditions as interest rates rise and consumer sentiment remains low,” said CoreLogic research director, Tim Lawless.

“In the first three months of the year clearance rates held up at about 70% but just as we’ve seen the rate of growth in values slow since peaking in early to mid-2021 the same trajectory has impacted the auction market.”

Sydney (57.2%) and Melbourne (61.1%) found themselves among the underperformers, largely due to falling prices and a bounceback in properties going to market. But typically sturdy markets like Brisbane and Adelaide also saw clearance rates dip.

Vendor confidence has subsequently taken a hit, with the number of withdrawn capital city auctions rising from 9.61% over the March quarter to 12.75% in the three months to June.

“Seasonally the number of auctions held in winter normally trends lower, however it’s possible this could be amplified this year as the housing market moves into a downturn,” Lawless said.

“Potentially we could see more vendors choosing to sell by private treaty rather than auction as fewer competitive bidders make the auction process less effective at achieving the best possible price.”

Affordability constraints were already weighing on the property market prior to any rate rises, but since the RBA pulled the trigger in May the downward trend in property prices has only accelerated.

Recent data from CoreLogic revealed that among 3,085 capital city house and unit markets, 41.9% recorded a fall in values over the June quarter. This is up from 23.6% over the first quarter of the year.

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