The early clearance rate across the capital cities fell to its lowest in three months last week, with the spring selling season getting off to a slow start on the back of four rate rises this year.
New data showed early clearance rates across the combined capitals fell last week to 48.2 per cent, marking the lowest result in three months since the week ending 21 June.
Data from Cotality’s latest Property Market Indicator Summary found that the combined capital clearance rate was also the second-lowest so far this year.
According to Cotality economist Annabelle Mezieres, the weaker result was broadly in line with expectations after the latest rate rise, as higher borrowing costs continued to impact price-sensitive buyers.
“Higher rates are reducing the amount some buyers can borrow and limiting their willingness or ability to stretch their budgets,” she told REB.
“Consumers now have to contemplate whether now is a good time to purchase a property, preventing prospective buyers from buying a home.”
As a result, she said this spring selling season was subdued compared to previous years, with low consumer sentiment among buyers limiting competition.
“Sellers will need to keep their pricing expectations realistic as the spring market and the macroeconomy evolve.”
In Melbourne, the preliminary clearance rate was 50.6 per cent, up 1.9 percentage points after Grand Final week, with volumes also rising 136 per cent.
With Victoria's new reserve price disclosure laws in effect, Mezieres said there would likely be more transparency around vendor expectations, but it was too early to tell.
“At the same time, some vendors may choose to negotiate before auction or favour private treaty campaigns if they perceive the new rules as reducing flexibility during the sales process,” she said.
Sydney saw its preliminary clearance rate rise 2.1 percentage points to 55.7 per cent, with the Labor Day long weekend reducing weekend volumes to 304, a fall of 61 per cent from the week before.
According to Cotality, lower clearance rates across smaller cities like Brisbane, Adelaide and Canberra brought the combined result down.
Brisbane's preliminary clearance rate declined to 25.6 per cent, marking the third time this year it had fallen within the 20 per cent range, while 139 auctions were held, similarly to the previous week.
Adelaide held 69 auctions, 32 per cent fewer than the previous week, with an early success rate of 41.5 per cent.
Canberra had the largest annual fall in auction volumes of any capital, with 31 auctions held - 46 per cent fewer than the same week last year, and 62 per cent fewer than the previous week.
The city’s preliminary clearance rate also fell 12.2 percentage points to 41.7 per cent.
In Perth, there were just eight auctions, while Tasmania held only two.
Real Estate Gym founder, Tom Panos, said last week’s results showed a “clear story” that the spring market was under pressure, with volumes and clearance rates continuing to fall.
“[It’s expected] that the week interest rates went up, auction rates went down again, partly because of the long weekend here in NSW and other parts of Australia," he said.
He noted Sydney and Melbourne had held up the best in terms of clearance rates last week, predicting they would be the first to come out of the auction slump.
However, nationwide, he said last week’s rate rise had evidently added another layer of caution.
“Buyers are doing the maths, lower borrowing capacity, higher repayments,” he said.
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