Auction clearance rates are often indicative of movement within the property market, and the recent drop in clearance rates is a strong sign of change to a booming Sydney marketplace. 

Off the back of strong price growth, a record number of auctions have been booked across the Sydney metro basin this financial year to date; at McGrath we saw an increase of 35% compared to the corresponding period in 2014.

However over the past month clearance rates have fallen with McGrath auctions reporting an average clearance rate of 66%, down 12% from the same period last year.  The eastern suburbs, inner west and lower north shore markets however continue to experience good buyer activity.

The buyer frenzy is starting to dissipate after a continued rise in property values, though a recent increase in stock hitting the market has provided a more even balance to buying prospects. In such times it is customary to see clearance rates fall as a by-product of supply being greater than demand.

It’s now a good time to be a buyer or a seller, with more stock to choose from on the buyer’s side while sellers who are prepared to meet the market still able to achieve above average sale prices. 

Current market conditions mean auctioneers need to adjust the way auctions are called.  There is no longer consistent multiple registrations and bidders’ competing as was the case earlier this year, buyers are now more astute and less emotional with the heat in the market slowly easing off. 

Auctioneers must tailor proceedings to engage with buyers, with vendor bids a part of a price maintenance strategy. Embracing buyers at smaller bidding increments early on in the auction is also crucial to keeping buyers active and included.

Looking ahead, I believe the biggest auction volumes are still ahead for the Sydney market. Buyers and sellers alike are watching interest rate movements as much as clearance rates as a guide as to how best engage in the selling process.