Melissa Iaria, Property reporter
First published 24 Nov 2023, 6:33pm
Clearance rates are cooling as auction volumes spike across the country, spurred on by buyers attempting to offload their properties in a pre-Christmas rush.
For a second week in a row, more than 3,000 properties are set to go under the hammer across the country according to PropTrack, up 20% compared to a year ago.
“It’s a fairly sizeable jump in activity,” PropTrack senior economist Angus Moore said.
The volume of auction and private sale listings on is also higher than last year, particularly in Sydney and Melbourne.
But Mr Moore said this time last year the housing market was in the midst of rapid interest rate rises, causing sellers to hold off during the traditionally busy spring selling season.
“Those markets were pretty quiet last year because of really rapid interest rate increases at this time last year, so it’s a bit more of a return to normality.”
Heated auctions are continuing across the country. Picture: Jeremy Piper
Last week, the national clearance rate eased to 56.9%, down three percentage points compared to a month earlier.
Sydney's clearance rate has dipped to 56.5%, down from 61.9% a month ago, while in Melbourne the clearance rate is hovering around 60%, down from 61.6%.
While clearance rates have fallen slightly in recent weeks, there is no correlation to be drawn on how that will affect prices, Mr Moore said.
“Clearance rates are a little softer, but not a lot, and it’s still much stronger than what we saw at the same time last year,” he says.
In markets such as Brisbane – typically a less auction-centric market than Melbourne or Sydney – the clearance rate has edged higher in recent weeks.
Other factors may prove more important in determining price moves, such as borrowing power, a tightening rental market and buyer demand.
Borrowing capacities have taken a big hit from rising interest rates. Picture: Getty
Mr Moore said the latest 25 basis point interest rate hike in November will “probably have some effect on the margins”.
“People will have less that they can borrow so it’s probably going to temper demand a little bit,” he says.
“But it’s also important to put in context the fact there were 400 basis points of rises prior to that, so it’s going to have an impact, but maybe a small one relative to what we’ve seen over the past 18 months.”
Even with another interest rate rise on the cards, Mr Moore said property demand remains strong.
“The rental markets are just very tight at the moment, which shows there are a lot of people looking for places to live and not a lot of places to live,” he says.
“We’re also seeing very low unemployment, which means we've got a lot of people in jobs and wages are growing. Both those things are really important for getting a mortgage and being able to service it, and therefore for housing demand.”
With housing affordability falling to its lowest level in three decades, Sydney buyer’s agent Deborah West said the lower end of the market is most sensitive to the interest rate shocks.
As a result, she said buyers are more cautious and auctions aren’t “performing at the crazy pace” of two or three months ago.
“Each rate rise that comes, people's borrowing capacity diminishes. That’s definitely going to cause some additional slowing at the lower end of the market,” Ms West said.
The lower end of the market is most sensitive to rising interest rates. Picture: Getty
“Once you start to get to the middle or higher end of the market, they’re not as interest rate sensitive.”
Mr Moore said in particular, first-home buyer activity has taken a hit.
“In that environment it is just very tough for first-home buyers, so we're not seeing that many jumping in at the moment, certainly compared to recent years,” Mr Moore says.
As the traditionally quiet Christmas-New Year period approaches, Ray White NSW auctioneer Perry Edmondson-Clark says vendors are continuing to launch properties for sale later in the year than usual.
“Historically, if you weren't on the market in mid to late November, agents were telling you to wait until next year, but we’re not seeing that this year,” he says.
The agency has used the demand to run a Christmas week campaign when traditionally the properties would be held off for sale until January.
“With the level of stock that's coming to the market, we need to pivot and be there to service that,” Mr Edmondson-Clark says.
“People are also a bit more flexible with their time to bid at auction during the day and we just want it there as an offering for owners who want to sell before Christmas.”
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