Despite lower volumes and a slew of withdrawals due to tough lockdown conditions in Sydney, Melbourne and Canberra, Australia’s residential auction market proved resilient throughout the September quarter.

CoreLogic’s Quarterly Auction Market Review for the three months to September 2021 shows 23,184 properties were taken to auction across the combined capital cities, down from 31,605 during the June quarter 2021.

The combined capital city clearance rate of 71.7% for the September quarter was down slightly from the 75.7% recorded in June but a strong improvement on the comparable quarter in 2020 when 59.2% of reported auctions were successful.

The report covers auctions held in the week ending 4 July to 26 September, when Sydney, Melbourne and Canberra entered their respective extended lockdowns. This resulted in fewer auctions and reported withdrawals figures averaged 18.3% nationally for the quarter, significantly higher than the 7.3% withdrawal figure recorded in the June quarter.

CoreLogic’s Research Director Tim Lawless said despite the restrictions Sydney’s auction clearance rate during this period held reasonably firm, averaging 78.0% compared with the preceding June quarter average of 78.6%.

“The steady result, albeit on a lower volume of auctions, demonstrates the strong selling conditions that have persisted across Sydney despite the lockdown,” Mr Lawless said.

“Throughout the September quarter, advertised supply levels have remained low while buyer demand has reduced but remained well above average. With demand outweighing supply, vendors have remained in a strong selling position while buyers have continued to feel a sense of urgency as Sydney housing values rose by approximately $620 per day during the quarter.”

Withdrawal rates heavily impacted Melbourne’s clearance rate of 62.8% for the September quarter, down from 73.3% over the previous quarter. At its peak, 61.6% of auctions were withdrawn in the week ending 29 August due to lockdown restrictions.

There were 9,493 properties taken to auction for the quarter compared to the three months to June when 13,693 properties were scheduled for auction.

“Melbourne’s auction conditions were profoundly weaker relative to Sydney through the September quarter, with the clearance rate falling to 35.9% over the last week of August,” Mr Lawless said.

“The difference between Sydney and Melbourne clearance rates through the September quarter highlights the importance both buyers and sellers put on the ability to physically inspect a property.”

Following the easing of rules on September 18, Mr Lawless said Melbourne’s clearance rate bounced immediately higher as fewer auctions were withdrawn and buyer confidence improved.

CoreLogic’s Head of Research Eliza Owen said the Quarterly Auction Market Review had shown auctions as a sales method was no longer exclusive to Sydney and Melbourne, growing in popularity in other Australian capital cities.

She said while Australia’s current housing market upswing has been broad-based, consistent growth in housing values through the September quarter in Brisbane (5.9%), Adelaide (5.5%) and the ACT (6.9%) may have contributed to more auctions being held in these cities.

In the September quarter, there were 2,107 auctions scheduled in Brisbane, 28.8% above the 10-year quarterly average. In Adelaide 1,732 auctions were scheduled for the three months to September, 47.9% above the 10-year average.

Despite being in lockdown, Canberra had 1,073 auctions scheduled in the September quarter, a 44.7% increase above the previous 10-year average.

“Not only have volumes been higher across Brisbane and Adelaide, but clearance rates have been well above historic averages through the September quarter, which may cement auctions as a more popular sales method across these cities through future housing market upswings,” Ms Owen said.

“One of the most powerful insights through the September quarter was the difference in market outcomes between Melbourne and Sydney. It highlights the importance of physical inspection in instilling buyer confidence and supporting transaction activity. Since physical inspections were reintroduced across Melbourne, the average final clearance rate has bounced back over 80%, which compares to an average of 48.3% in the four weeks prior.”

The final week of the quarter presented a capital city weighted average clearance rate of 80.6%; the fourth highest clearance rate on CoreLogic records (with auction results commencing in mid-2008).

A clearance rate of 80% or more is representative of a seller’s market, Mr Lawless said, as vendors benefitted from strong selling conditions and above average levels of price growth driven by low supply levels.

“The high clearance rate at the end of the quarter implies the spring season is likely to be an active one, with a further rise in scheduled auctions as home owners take advantage of the seller’s market,” he said.

“As lockdowns ease further it’s likely we will see a lift in the number of auctions held, as well as a rise in overall listing numbers, as pent up supply flows into the market. Auction numbers generally peak around late November to mid-December, so there is also the seasonal factor to consider as more auctions would generally be scheduled at this time of the year under normal conditions.”

However, Mr Lawless warned deteriorating affordability, increasing advertised supply levels, less government stimulus and the Australian Prudential Regulation Authority’s subtle tightening of credit availability are likely to have a dampening effect on housing demand.

For more information, visit www.corelogic.com.au.

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