Preliminary auction clearance rates hit a seven-week high last week, but falling volumes signalled more sellers were ditching the hammer for private treaty as buyers remained cautious.
New data has shown that early auction clearance results slightly bounced back in the week ending 12 July, rising across the combined capitals to 54.8 per cent.
The results marked the highest in seven weeks, and the first time the clearance rate was above 50 per cent in three weeks, up from 49.8 per cent the week before.
The number of auctions held fell by 8.7 per cent to 1,318, down 8.0 per cent from the same week a year ago.
Cotality’s head of research, Gerard Burg, said that rather than a change in buyer sentiment, there was a shift in seller behaviour, with new listings slowing significantly and vendors opting for private treaty rather than auctions.
Following a culmination of affordability pressures, he said buyers had been exiting the market earlier in their search, with sellers now responding to the new conditions.
“Auctions are losing a bit of the shine, and that’s flowing through into the situation that we’re having now.”
Burg said auctions were most favoured in high-demand environments, but sellers had begun to shift away after realising confidence was low.
“The nightmare scenario for a seller is that they just simply have the property passed in, and nobody shows a lot of interest in the property. And I think that’s what we’re starting to see now.”
As a result of the lack of buyer demand, Burg said there had also been an increase in property withdrawals from sale and a tendency to sell before the auction date.
“People are favouring the certainty of either if they do start an auction process – they’re accepting offers, perhaps with some negotiation with the buyer, but not taking it to auction or pulling back and looking for a private sale.”
Out of the capitals, Sydney saw the largest shift in clearance rates, with the early clearance rate up to 57.5 per cent, the highest in ten weeks and above the 47.3 per cent low three weeks ago.
Meanwhile, volumes fell to 452 auctions, down 18.7 per cent on the week and on a year ago.
Melbourne recorded a preliminary clearance rate of 56.2 per cent, up from 54.5 per cent two weeks prior, the highest early result in four weeks.
The capital saw 585 homes brought to market, just a 0.3 per cent increase on the week prior, but 6.8 per cent below its level a year earlier.
Brisbane saw the most improvement among the mid-tier markets, with an early clearance rate of 43.0 per cent, up from 23.8 per cent the week before.
There were 128 auctions, up 7.6 per cent from the previous week and 25.5 per cent higher than a year ago.
Similarly, Adelaide’s preliminary clearance rate rose sharply to 59.1 per cent from 45.7 per cent a week earlier, but the auction volume fell 25.9 per cent to 83.
Among the smaller capitals, Canberra achieved a preliminary clearance rate of 44.9 per cent out of 60 auctions.
Only eight auctions were held in Perth, while just two went under the hammer in Tasmania.
In the weeks ahead, Burg said the trend of lower auction volumes would likely continue, as sellers opted for private treaty, allowing the clearance rate to edge slightly higher.
“But it comes down to that interaction between supply and demand and whether homes listed for auction are actually meeting the market in terms of what buyers and sellers are after.”
Want to see more stories from trusted news sources?Make Real Estate Business a preferred news source on Google.
