Auction listings drop 80pc on coronavirus restrictions

Clearance rates expected to fall to around 30pc as agents move to online and phone call auctions.

Economists predict market volatility and low volumes will make auction clearance rates an unreliable market indicator for the foreseeable future.

The number of homes being taken to auction this weekend has fallen by almost 80 per cent following the federal government’s bid to curb the spread of coronavirus through a ban on public auctions.

Sydney and Melbourne streets will be noticeably quieter on Saturday as the sound of the auction hammer turns digital, with auctioneers turning to online live streaming and telephone bidding to sell properties

Only 21 per cent of auctions originally scheduled for this weekend in the country's two largest capitals will be put to the market, according to data firm SQM Research.

Predictions from market analysts show the national auction clearance rate dropping below 50 per cent for the first time since February 2019, when the market was in the middle of a downturn. It comes off the massive highs of 75 per cent to 80 per cent in the major capital cities achieved just six weeks ago.

A majority of the 2369 properties planned to sell this weekend were converted to private treaty sales, including 823 in Melbourne and 423 in Sydney.

Sydney will be offering 290 homes of the originally scheduled 1007 on Saturday, making it the busiest city in the country. Sold prior figures were up to 238 properties, while 56 were withdrawn or rescheduled. Australia’s auction capital of Melbourne still has 218 of the slated 1372 events going ahead after 288 homes were sold prior and 43 were withdrawn or rescheduled.

SQM Research managing director Louis Christopher anticipates numbers to stay low for some time but said the movement towards private sales and the uptake of digital auctions by some major agencies will allow the market to continue to tick along.

“Not all hope is lost for sellers,” Mr Christopher said. “I think the market is going to go into a hiatus, a bit of a temporary freeze, but there will still be sales that will be occurring. It's not as though the market has gone into a formal trading halt.”

On Tuesday evening, Prime Minister Scott Morrison announced all public auction activity and open homes would be suspended indefinitely in the second wave of social distancing measures. One-on-one viewings of homes and digital auctions are still possible.

This weekend will be the first test of the new state of play in the marketplace, with pandemic fears and government closures of non-essential services likely to dent buyers confidence, which had driven the market for the past 10 months.

“Sales activity will be a lot lower, buyers will be on the sidelines, sellers will be on the sidelines,” Mr Christopher said, while flagging clearance rates could fall to 30 per cent this weekend.

“Our view is once we get on top of the case numbers and restrictions start to lift, we will see a surge in confidence in the economy and a surge in ad confidence in the housing market.

“Normally a clearance rate of 30 per cent means that prices are falling by an annualised double-digit rate. But this weekend is an abnormality because of the new laws introduced midweek to ban auctions," he said.

Several economists have predicted that market volatility and low volumes will make auction clearance rates an unreliable market indicator for the foreseeable future.

Boutique real estate agency BresicWhitney operates exclusively in the fertile auction grounds of Sydney's premium inner-city suburbs. But in the past three days, all of the almost 90 properties originally slated for the auction block over the next two weeks have become private sales.

Director Shannan Whitney told The Weekend Australian the change was an easy decision and makes sense for all parties.

“I don’t think the auction system is appropriate for the conditions. We made a decision and I think it is best for sellers and buyers and safest for our agents,” Mr Whitney said. “How can you get the best outcome when faced with the challenges and blockages of the current market?”

“One of the greatest deciding factors was the impact of fear on behaviour. It is so severe at the moment that putting auctions on now is pretty crazy.”

National agency Ray White proactively announced on Tuesday it would be completely moving to digital auction. The company’s Queensland chief auctioneer, Mitch Peereboom, said the new normal will push the industry to more rapidly adopt new technologies

“This is a new world, but it’s one we’re embracing with enthusiasm, and there’s no doubt that auction is the best method of sale no matter what the climate is at the time,” Mr Peereboom said.