Clearance rates are expected to fall below 60 per cent for the first time since mid-2019, while home owners rush to sell their homes before the coronavirus panic impacts buying sentiment further.
Amid growing concerns relating to the COVID-19 crisis, vendors have rushed to sell their homes under the hammer, with auction volumes rising around the country in the week ending 22 March 2020; however, seller sentiment appears like it could soon subside, according to CoreLogic.
Figures released by the property research group showed that a total of 2,539 properties were brought to auction over the week across the capital cities, making it the second busiest week for auction activity for 2020.
Overall, auction activity over the week brought in a preliminary clearance rate of 61.3 per cent, with this rate likely to be revised down to be the first week to see clearances fall below 60 per cent since mid-2019, according to CoreLogic.
The previous week saw lower volumes, with 2,274 homes taken to auction but resulted in a higher preliminary clearance rate of 70.6 per cent, which was revised down to a final clearance rate of 65.3 per cent.
Despite a weaker clearance rate week-on-week, the results come in much stronger than those of the same week last year, in which 1,667 homes were taken to auction and clearance rate of 50.9 per cent was recorded; however, the market was considerably weaker at this time.
In light of the results, CoreLogic stated the week marks a “turning point” in the market, as home owners rush to sell, while buyers’ activity stalls amid the COVID-19 pandemic.
The week of auctions marked distinct changes in both buyer and seller sentiment, according to CoreLogic, due to the widespread adoption of social distancing measures, the avoidance of public gatherings, as well as weaker confidence levels in light of the COVID-19 pandemic.
The results also recorded an increased number of sellers who experienced cold feet, with auction withdrawal rates uncharacteristically jumping over the week.
“Prior to this weekend, the year to date withdrawal rate across the preliminary reading was averaging around 5 per cent across the combined capital cities, rising to just over 8 per cent on Sunday’s numbers,” CoreLogic said.
“In all likelihood, we will see more vendors choosing to withdraw from the market until confidence and selling conditions improve.”
While the latest week’s auction results have been impacted by COVID-19, CoreLogic stated that, to date, there is no evidence of reduced housing values.
However, CoreLogic said that “it is clear that transactional activity will be temporarily disrupted in coming weeks and months”, and that the extent of said disruption will be dependent on how long the virus takes to be contained and for sentiment to recover.