Auction market update

RP Data tracks auction results across all capital cities of the country, typically collecting results for between 85% and 90% of all auctions each week. Through our Agent’s Advice team we contact our vast network of agents to compile the most accurate auction figures possible.  With this level of data collection we can confidently comment on the health of the capital city auction markets.

The auction market has seen some easing of clearance rates in recent times as market activity has slowed and the residential property market has transitioned from a period of strong value growth to more sustainable levels.

Between August 2008 and last week the peak in the weighted average capital city auction clearance rate was recorded at 79.7%.  This peak was recorded during the spring selling season last year during the week to the 13th September (almost one year ago).  During that week there were more than 1,300 capital city auctions and clearance rates ranged from 68.2% in Adelaide to 84.2% in Melbourne.

Clearance ratesSource: rpdata.com

Moving forward a little over a year, the most recent weighted average capital city auction clearance rate is recorded at 60.0% across approximately 1,750 auctions for the week. Throughout the individual capital cities, clearance rates have ranged from 23.5% in Brisbane to 69.7% in Canberra.

Although these results have occurred across the combined cities, auction markets are most significant in Melbourne and Sydney.  In these cities there has also been some noticeable easing in clearance rates.  Over the same period as the previous analysis, clearance rates in Melbourne peaked at 88.0% in April 2009 and in Sydney the peak was recorded at 83.3% in Sydney during the last week of January this year.  Over the last week clearance rates sat at 65.6% in Melbourne and 63.1% in Sydney.

Mel and Sydn clearance ratesSource: rpdata.com

Despite the fact that the actual capital city weighted average clearance rate is almost 20% lower than it was at its peak, the volume of properties being taken to auction at a time when market conditions are much softer is far greater this year than last.

Auction volumesSource: rpdata.com

The results show that you still have a better than 50% chance nationally of selling your property if you take it to auction.  Of course the auction process doesn’t end after an unsuccessful auction – the home may go on to sell a week later or longer – if not the home would either be removed from the market or re-listed as a private treaty sale.  Also, an auction marketing period is typically 4 to 6 weeks so most vendors would have to like those odds of selling in a relatively short timeframe by taking their property to auction.

When looking at the results for June of each of the last five years it is clear that auctions are increasing in popularity.  The table below shows that in each capital city, the proportion of properties selling at auction over the month has been increasing.  This also provides insight as to why the auction volumes are still very healthy despite the easing clearance rates.

Proportion of sales by auction Jun-06 to Jun-10

Auction volumes table Source: rpdata.com

Overall, the results show that although clearance rates have dipped, many vendors prefer to take their properties to auction.  Clearly, buyers are also quite happy to purchase at auction with the proportion of auction sales growing in most capital cities of the country.

About Tim Lawless

Tim heads up the RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia

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