Spring market struggles to gain momentum as auction volumes tumble

Cotality economist Annabelle Mezieres said the usual lift in listings and auctions through spring and early summer was expected to be more subdued this year as falling home values and more challenging selling conditions weighed on activity.

“Given the weak trend through winter and the persistent shortfall in auction volumes compared with last year, the spring season is expected to be less active than what we have seen over recent years,” Mezieres told REB.

Across the combined capitals, Cotality data showed 1,462 homes were auctioned in the week ending 7 September, unchanged from the previous week, the fourth consecutive week in which they remained more than 30per cent below year-ago levels.

Despite the weak start, the preliminary clearance rate remained steady at 52.7 per cent, only slightly above the previous week’s 52.4 per cent and the winter preliminary average of 52.3 per cent.

Mezieres said the next few weeks would give agents a clearer indication of whether buyer demand could absorb the expected increase in spring auction activity.

“For agents, the next few weeks will be a good indicator as to where the market is heading,” Mezieres said.

She said the relationship between rising auction volumes and clearance rates would be particularly important.

“For instance, if clearance rates remain stable as auction volumes rise, it would suggest that buyer demand is present and vendors have adjusted their price expectations to meet the market. If clearance rates start to reduce, it may suggest that spring listings are outpacing demand.”

Vendors hold back as buyers remain selective

Mezieres said the softer start to the spring selling season suggested both vendors and buyers remained cautious.

“Seeing as we have moved through five consecutive months of a national home value decline, vendors will naturally become more cautious as falling home values discourage them from listing their properties.”

She said vendors appeared less willing to test the market than they were a year ago, with the flow of new listings nationally down 3.1 per cent and 6.4 per cent compared with last year and the five-year average respectively.

On the demand side, Mezieres said buyers were still present but remained selective, with auction volumes consistently below year-ago levels since mid-May.

She said affordability pressures, serviceability constraints and weaker confidence were making buyers more price-sensitive and less willing to stretch their budgets.

This was particularly the case as inflation remained well above its target, with economists and financial markets now forecasting another RBA rate increase this year.

“For the buyers who have the confidence to transact, they benefit from a wider selection of stock, great negotiation power and less urgency,” Mezieres said.

Additionally, data showed total listings were now roughly 18.1 per cent higher nationally than they were a year ago and approximately 2.2per cent above the 5-year average.

Mezieres said subdued vendor activity and selective buyer demand could explain why auction volumes were significantly lower than last year while clearance rates remained low but relatively steady.

Auction activity was nevertheless anticipated to lift over the coming weeks, rising to around 1,640 this week and 1,900 next week.

Across the capital cities

For the week ending September 7, Melbourne remained the busiest auction market, with 662 homes going under the hammer, 27.9 per cent lower than the same week a year earlier.

Its preliminary clearance rate rose to 58.2 per cent from 54.9 per cent the previous week.

Sydney recorded 523 auctions, with volumes 27.9 per cent lower than the same period a year earlier. Its preliminary clearance rate rose to 57.7 per cent, an 18-week high.

In Brisbane, 133 homes went under the hammer, 7.6 per cent below the same time last year, while the preliminary clearance rate remained subdued at 24.8 per cent.

Adelaide recorded 95 auctions, 13.1 per cent higher than the same week last year, although its preliminary clearance rate fell to 34.5 per cent.

In Canberra, just 35 homes went under the hammer, half the number recorded a year earlier, with the preliminary clearance rate dropping to 36.7 per cent.

Perth saw just 13 auctions, with a third selling, while Tasmania recorded only one auction.