Auction clearance rates soar as heat returns to property market

Auction clearance rates in Sydney and Melbourne soared above 80 per cent at the weekend.

Record low interest rates and higher consumer confidence is fuelling the property market. Picture: John Appleyard

Auction clearance rates in Sydney and Melbourne soared above 80 per cent at the weekend as buyers sought houses in the middle and outer suburbs to accom­modate more flexible working ­arrangements.

Property researcher CoreLogic reported 891 homes went under the hammer nationally, 266 more than the same week last year, ­returning a national clearance rate of 81.1 per cent, which was well above last year’s 61 per cent.

CoreLogic head of research Tim Lawless said record low interest rates and higher consumer confidence, especially among first-home buyers eager not to miss out, was driving the market.

“Consumer sentiment, which measures household mindsets about their finances and domestic economy and the willingness to make a high commitment decision, is seeing people get back into the market,” he said.

“If you’re going to be buying a home, it’s a big decision so to have a decent level of confidence is ­important.”

Melbourne had 388 auctions and a clearance rate of 83 per cent, while Sydney recorded 272 auctions with a clearance rate of 82.9 per cent.

The figures indicate renewed optimism in the market compared with last year’s opening weekend, where COVID-19 fears dampened buyers’ willingness to bid.

A year ago, Melbourne had 211 auctions listed with 65.8 per cent clearing sale, and Sydney 158 auctions with a clearance of 72.9 per cent.

Canberra and Adelaide also ­recorded clearance rates above 80 per cent.

Meanwhile, Perth recorded a 66.7 per cent clearance rate, up from 38.9 per cent a year ago, and Brisbane cleared 55.2 per cent at auction, up from 36.6 per cent last year.

 

Though the clearance rate is likely to be revised to a lower figure once data is finalised, Mr Lawless said the numbers indicated buyers, emboldened after a volatile year, were also responding to pent-up demand. “There is a bit of urgency coming back into the marketplace, when listing numbers are low and we’re seeing homes selling faster. Buyers have lost quite a bit of leverage to negotiate, so all those indicators are pointing towards a sellers market,” he said.

“Under these conditions, we expect prices to keep rising and for that reason, buyers are feeling a sense of urgency, so FOMO is coming back into the ­decision-making,” Mr Lawless said.

A crowd gathers for an auction at 9 Elizabeth St in Geelong West, Victoria, on Saturday. Picture: Mike Dugdale

SQM managing director Louis Christopher said buyers’ interest had been focused on properties on city fringes this weekend, a trend accelerated by the pandemic as work became more flexible.

“Normally you see high concentrations of auctions in inner-urban areas but in Sydney and Melbourne mostly it’s in the middle and outer rings and satellite ­cities such as the central coast and Mornington Peninsula,’’ he said.

“Demand for real estate is strong for regional and outer areas — people want larger properties, they want to get away from other people with the pandemic still going on and this trend is set to continue in 2021.’’

Ray White Group managing director Dan White said the real estate had experienced a rec­ord January despite it being “normally not the peak month”.

“We’ve seen prices 5 per cent higher than reserve, which is a ­­rec­ord number for us, and 3.6 people bidding per auction across all our actions that’s led to that 5 per cent,” he said.

Mr White said more remarkably the market was strong across the board, not just in major metropolitan cities. “These incredible numbers — that’s Australia-wide we’re talking about, not just Melbourne and Sydney,’’ he said.