The number of successful auctions declined in the June quarter as rising interest rates, runaway inflation and weak consumer confidence create a difficult selling environment.
According to CoreLogic, 31,439 auctions took place across Australia in the three months to June. Despite being the busiest second quarter of June on record in terms of volume, the rate of successful auctions has dropped significantly.
Only 60.8% of reported auctions were successful, compared to 75.7% during the same period last year. This is the lowest clearance rate of any quarter since the dismal 59.2% figure in September 2020.
“The latest results continue to highlight tougher selling conditions as interest rates rise and consumer confidence remains weak,” said Tim Lawless, director of research at CoreLogic.
“During the first three months of the year, clearance rates have held steady at around 70%, but just as we have seen the rate of growth in values slow from the peak in early to mid-2021, the same trajectory has had an impact on the auction market.”
Sydney (57.2%) and Melbourne (61.1%) found themselves among the worst performers, largely due to falling prices and a rebound in properties coming on the market. But generally robust markets like Brisbane and Adelaide have also seen clearance rates fall.
Seller confidence subsequently took a hit, with the number of canceled auctions in capitals rising from 9.61% in the March quarter to 12.75% in the three months to June.
“Depending on the season, the number of auctions held in the winter normally tends to drop, but it’s possible that could be amplified this year as the housing market enters a downturn,” Lawless said.
“Potentially, we could see more sellers choosing to sell privately rather than bid, as fewer competitive bidders make the bidding process less efficient in getting the best possible price.”
Affordability constraints were already weighing on the property market before any rate hikes, but since the RBA pulled the trigger in May, the downward trend in property prices has only accelerated.
Recent data from CoreLogic revealed that among 3,085 home and unit markets in the capital, 41.9% saw a decline in values during the June quarter. This is an increase of 23.6% compared to the first quarter of the year.
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