Auction Clearance Rates - Sold to Listed - August 13th 2022
Please note the following is based off preliminary numbers and is subject to significant changes once unreported auctions are chased up.
It should be taken as an extremely rough and preliminary indicator, before other data sources fill in the blank later next week.
For those wanting more accurate data with the missing pieces filled in, that is posted here by the great team at SQM Research on Tuesdays.
Auction Action Summary
A rather noticeable uptick in clearance rates for both Sydney and Melbourne this week, with both cities putting in roughly their equal strongest performance since the RBA started raising interest rates.
It is however worth noting that this come back has occurred on significantly reduced volumes in Melbourne and in Sydney the number of scheduled auctions is similar to this time last year when the city was in its second month of lockdown.
The big question is why we have seen a bit of a lift in clearance rates? Several theories have been put forward:
Sellers are meeting the market and letting their properties go at lower prices.
Some buyers are not all that sensitive to rising rates and see an opportunity.
Buyers are rushing to transact before their borrowing power is eroded and they are priced out of the market.
In my view its probably a combination of all three and more than a few other factors.
While it may seem silly to some to rush to transact amidst falling borrowing power, to others it makes perfect sense.
For example, back in July 2020 a borrower (2 adults) on the median household income of $81,577 could borrow $566,000 from the Commonwealth Bank (CBA). Today that same household would only be offered a maximum of $493,300 based on the offered standard rate and a 20% deposit.
According to CBA’s calculator if mortgage rates were to rise a further 1.7% to 5.6%, that households borrowing power would be reduced to $414,000.
On a 4 week moving average basis since the RBA cut rates, we are seeing a lift for both the monitored cities. It will be interesting to see how the market performs when the spring selling season begins next month.
Q&A
Why are these numbers different to those provided by Corelogic or Domain?
This data is based upon the percentage of scheduled auctions that resulted in a sale of the property as of the time of the initial reporting by agents on Saturday evening.
The data from Corelogic and Domain is based upon the number of successful auctions divided by the number of auctions reported by agents and other property industry figures.
— If you would like to help support my work by donating that would be much appreciated, you can do so via Paypal here or via Buy me a coffee.