Melbourne’s Super Saturday

On a national basis, the number of auctions taking place has remained very buoyant during spring and is above average in all capital cities.  Meanwhile, auction clearance rates have been trending lower since May of this year, it’s no coincidence that nationally, property value growth has begun to also taper since May of this year.

Melbourne is typically the most significant auction market; during 2010 47% of all capital city auctions have taken place in the city.  In comparison, Sydney has held 34% of capital city auctions, Brisbane 8.5% and Adelaide 5%.

proportion

This week is set to be one of Melbourne’s busiest for auctions of this year.  There are currently 1,283 auctions planned for the week in the city with 1,261 of these planned to go under the hammer on the weekend.

Acution volumes in Melbourne

Should all of these auctions take place, it will be the busiest weekend for auctions in Melbourne since RP Data began tracking results in mid 2008.  The fact that there are so many auctions taking place is a little surprising given the slowdown in property market conditions and housing finance is trending lower.

The Melbourne property market is following the national trend with the rate of property value growth easing (down -1.1% for the three months to August) and this slowdown has been reflected in lower auction clearance rates across the city since the beginning of spring.

During 2010, Melbourne has held an average of 651 auctions each week.  Across these 651 auctions, the average clearance rate has been recorded at 70.6%.  Since the beginning of the spring selling season, weekly auctions have averaged a greater 673/week (759/week if you exclude the first grand final weekend).  During spring, the average auction clearance rate has been recorded below the average for 2010 at 65.4%.

Melbourne is not the only capital city with an increase in the number of auctions this week.  Most capitals are recording above average auction volumes despite the fact that clearance rates are trending lower.  Sydney has 669 auctions planned for this week compared with a 2010 average volume of 480 auctions.  Similarly Brisbane (176 vs an average of 118 auctions), Adelaide (90 vs 71 average) and Perth (38 vs 25 average) are all currently recording higher than normal volumes at a time when clearance rates are below average.

Super Saturday is going to be one of the most important and timely litmus tests on market conditions.  With so many auctions taking place, should there be a significant easing in clearance rates it will indicate that market conditions are continuing to weaken.  On the other hand, stable clearance rates or an improvement over and above recent results will indicate that the market is stabilizing.  Stay tuned, we will update this post with the preliminary weekend results on Monday.

UPDATE

RP Data’s preliminary auction clearance rates released on Monday of each week show that the national weighted average auction clearance rate was 59.4% last week, up from 55.6% the previous week.  In Melbourne, 1,227 auctions were undertaken last week and the prliminary clearance rate was recorded 65.1%, increasing from 61.8% during the previous week.  It is encouraging to see that clearance rates remained buoyant, actually increasing, in the face of a significant increase in auction activity.

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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