Continuous interest rate hikes, surging inflation and high cost of living slow down auction activities across capital cities on the final weekend of 2022.
Auction clearance rates drop to the lowest levels since early July after hosting the busiest auction week since late May in the previous week.
Preliminary total auction rate
CoreLogic’s recent data shows that auction activities fell by almost -15.1% from last week’s record of 2,717 as 2,307 homes went under the hammer across the combined capital cities this week. In contrast, this was almost half compared to the same time last year when 4,783 were auctioned off.
After recording its busiest week since late May, Sydney’s auction volumes dropped from 964 to 799 – a -17.1% fall from last week.
In Melbourne, auction activity slipped by -16.8% as 1,020 homes went under the hammer. While it was down from 1,226 homes the week prior, this was the fifth consecutive week that the city held above the 1,000 mark.
Across the smaller capitals, Brisbane had the busiest auction market as it recorded 185 auctions – up by 2.8% from last week. Adelaide came in second with 176, which saw a -7.9% decrease from last week.
Canberra’s record also fell by -31.7% to 97 homes for auction. Meanwhile, Perth had 26 auctions this week while Tasmania had four.
Preliminary total clearance rate
With weaker consumer sentiment and market, clearance rates softened by -2.1% to 55.8% this week – the lowest preliminary result since early July. Last week, 57.9% of the preliminary auctions turned out successful.
Of the 613 results collected, Sydney’s early clearance rate fell by 0.90% to 57.6% – making it the city’s lowest preliminary clearance rate since late August (56.9%). With the decline, Sydney’s withdrawal rate also climbed to 23.5%, the highest rate since mid-July (24.7%).
Melbourne’s early clearance rate fell below the 60% mark to 57.8%. This was -1.6% lower compared to last week’s early rate of 59.4% and slightly down from this time last year when 60% of the auctions were successful.
Despite falling by 0.20%, Adelaide remained strong and recorded the most successful week of the smaller capitals with a preliminary clearance rate of 65.3%.
Coming in second was Canberra with 50.7%. Meanwhile, Brisbane recorded its lowest early clearance rate this 2022 with 34%. Perth had seven successful auctions of the 18 collected. In Tasmania, the one result collected so far turned out unsuccessful.
Market Outlook for 2023
2022 was a challenging year for Australia’s property market as the RBA increased the cash rate to 3.10%, driving the interest rates higher and housing demands lower.
According to CoreLogic’s Head of Research, Eliza Owen, two market trends dominated 2022:
“More expensive markets tended to see sharper declines, while the more affordable segment of the market where buyers typically do not have to extend themselves as much to buy into, saw greater resilience to increases in interest rates,”
“The second trend is the pace of decline has been slowing on a broad basis since September. While this may be seen as a positive by some, there is still risk of the decline re-accelerating in the year ahead,” she said.
Despite the prominent ease of decline, the RBA’s forecast of further rate rises may cause the rate of decline to accelerate.
As previously noted by Tim Lawless, CoreLogic’s research director, “Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,”
“However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.”
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