The combined capital city auction market recorded the highest preliminary clearance rate in more than two years, having reached 76.6%.
Even with the final rate likely to revise lower once the remaining results are collected, it is expected to hold above 70%, a milestone that hasn’t been reached since May 2017.
According to Kevin Brogan, CoreLogic national auction market commentator, a clearance rate between 60% and 70% is considered “usual.”
“If you’re talking about market confidence, the 70% benchmark is when we start seeing people attaching significance to the clearance rate in terms of their bidding confidence,” he continued.
“This week, we’ve had the best results we’ve had in years. Sitting behind that is the continued strength of performance in Sydney and Melbourne.”
Melbourne returned a preliminary clearance rate of 78.3% as compared to 54% year on year.
Sydney came in at 81.7% versus just 51.9% in 2018. The ‘city and inner south’ sub-region recorded a “remarkable” preliminary clearance rate of 100%, with all 42 recorded results having cleared.
There were 1,221 homes taken to auction across the combined capital cities last week, returning a preliminary clearance rate of 76.6%. Over the same week last year, there were nearly a third more homes taken to auction, but a much lower clearance rate of 53.3%.
“Over time, if you look at the correlation between auction clearance rates and house prices, you can see that a strong auction clearance rate does quite often manifest fairly quickly into stronger house prices,” said Brogan.
“With the interest rates where they are and the serviceability buffer having been eased, it’s perfectly feasible to expect that people have applied for mortgages to get themselves preapproved and ready to go.”
”The thing is we don’t actually see that in the data yet, so the question is: if another 500 properties come to auction, is there sufficient demand to take that up without seeing the clearance rates soften?”