The final week of auction reporting for 2017 returned a preliminary auction clearance rate of 64.2 per cent across the combined capital cities, increasing on last week when the final auction clearance rate fell below 60 per cent for the first time this year, when only 59.5 per cent of auctions cleared. The number of homes taken to auction fell this week, after the surge in activity recorded over the 4 weeks prior when volumes remained consistently above the 3,000 level. There were a total of 2,865 auctions held this week, down on last week when 3,371 auctions where held across the capitals and only slightly higher than volumes from the same week one year ago (2,735).
Melbourne and Sydney both saw an increase in preliminary clearance rates this week, with 67.3 per cent and 60.8 per cent of auctions clearing which was up on the previous week when both cities recorded their lowest clearance rates of the year. The smaller auction markets returned varied results this week, with Adelaide recording the highest preliminary auction clearance rate of 70.1 per cent, while only 43.3 per cent of auctions sold in Perth.
This week across the combined capital cities, auction volumes remained high with 3,353 homes taken to auction returning a preliminary clearance rate of 63.1 per cent, increasing from last week when the final clearance rate across the capitals recorded the lowest not only this year, but the lowest reading since late 2015/ early 2016 (60.3 per cent).
The lower weighted clearance rates of late can be attributed to the continual softening conditions across the two largest markets of Melbourne and Sydney, with clearance rates tracking below 70 per cent across Melbourne for 5 consecutive week’s now (67.4 per cent), however volumes across the city have been consistently higher; with volumes this week reaching their second highest level this year (1,837), while Sydney’s clearance rates have tracked around the mid-high 50 per cent range over 7 consecutive week’s (58.7 per cent). Across the smaller markets, Canberra recorded the highest preliminary clearance rate this week, with 66.7 per cent of homes selling, while Brisbane returned the lowest with only 46.6 per cent of auctions successful.
There were 3,276 auctions held across the combined capital cities this week, returning a preliminary auction clearance rate of 63.5 per cent, increasing on last week’s final auction clearance rate of 61.1 per cent when the combined capitals recorded the third busiest week for auctions so far this year (3,438). Over the same week last year, auction volumes were similar to this week (3,207), although the clearance rate was considerably higher at 72.3 per cent.
Across the two largest auction markets, Melbourne and Sydney, both cities saw an increase in the rate of clearance over the week, however the 66.0 per cent preliminary clearance rate across Melbourne is only slightly higher than last week’s final; this is likely to revise lower as final results are collected and potentially surpass last week as the lowest seen since June 2016. While the performance across the smaller markets was varied this week, with Canberra recording the highest preliminary clearance rate of 75.6 per cent, while only 44.9 per cent of homes sold across Brisbane.
National dwelling values held steady in November, with a 0.1% fall in capital city dwelling values offsetting a 0.2% rise in values across the combined regional markets of Australia, according to CoreLogic’s November Hedonic Home Value Index results.
According to CoreLogic head of research Tim Lawless, a significant contributor to the downwards movement over the month came from the Sydney housing market, which recorded a 0.7% fall in dwelling values, while a fall in values was also recorded across Darwin and regional Northern Territory which were both down 0.4% over the month. For the remaining broad regions of Australia, dwelling values were relatively steady, or experienced a subtle rise, over the month.
Index results as at November 30, 2017
National dwelling values tracked 0.2% higher over the past three months and have increased 5.2% over the twelve months ending November. The national annual growth rate has now halved since reaching a recent peak in May 2017, when dwelling values rose 10.4%.
Conditions remain diverse across the regions
Mr Lawless said, “The diversity in capital city housing market conditions is highlighted by the rolling quarterly change in dwelling values, which range from a 3.3% rise in Hobart, to a 2.7% decline in Darwin. However, considering that together these two cities account for less than 1.5% of total housing stock in Australia, they have had little effect on the overall headline figures.”
He said, “On the other hand, softer housing market conditions across Sydney, which comprises roughly one fifth of national dwelling stock (and approximately one third by value), has a material influence over the headline growth trends.”
The Sydney housing market moved through a recent peak in July 2017 and dwelling values have been trending lower each month since that time. Dwelling values were down 0.7% in November to be 1.3% lower relative to the market peak. Sydney’s 1.3% fall over the past three months is the greatest decline over a three month period since March 2016. While the rate of value decline in Sydney has gathered some momentum, it remains extremely modest.
Mr Lawless believes there is mounting evidence that the Perth housing market may finally have bottomed out. Dwelling values across Perth have edged higher over each of the past three months to record the first rolling quarterly capital gain since late 2014. The three months to November saw Perth dwelling values rise by 0.3%. In addition to values moving off their low base, settled sales are rising (+3.8% year on year), homes are selling faster (59 days compared with 68 days a year ago) and advertised stock levels have reduced substantially (-12.7% compared with last year). He said, “If this is indeed the start of a recovery phase in the Perth housing market, it comes after dwelling values have fallen 10.8% since peaking in mid-2014.”
There were 3,409 homes taken to auction across the combined capital cities this week, returning a preliminary auction clearance rate of 66.9 per cent, overtaking last week as the third busiest week for auctions so far this year. Last week, based on final results, 60.9 per cent of the 3,390 auctions held recorded a successful result, the lowest clearance rate since late 2015/early 2016.
Once final results are collected, the combined capital city clearance rate tends to revise down so at this stage it’s looking like the final clearance rate on Thursday will be in the mid to low 60 per cent range for the sixth week in a row. Sydney and Melbourne, the two largest auction markets, have seen clearance rates increase week-on-week after last week saw both cities recording their lowest clearance rates for the year so far, however as usual, these clearance rates will revise lower over the week. Over the same week last year, a total of 3,398 homes were taken to auction across the combined capital cities, and a clearance rate of 73.0 per cent was recorded.
Further confirmation today that Sydney is leading the property market lower, based on the preliminary auction results from CoreLogic.
The combined capital cities returned a preliminary auction clearance rate of 65.4 per cent this week across 3,335 auctions making it the third busiest week for auctions so far this year, increasing from 62.8 per cent across 2,907 auctions last week. This time last year, 2,987 homes were taken to auction and a clearance rate of 74.4 per cent was recorded.
The final clearance rate has remained below 65 per cent for the last 4 weeks and it’s likely that this will be the case again on Thursday when the final results are released. One of the biggest contributors to the softer auction market conditions is Sydney, where the final clearance rate has remained below 60 per cent since the last week of October, while Melbourne has slipped below 70 per cent for the second week in a row.
This week, there were 2,894 auctions held across the combined capital cities returning a preliminary auction clearance rate of 66.5 per cent, increasing on last week when the final auction clearance rate fell to its lowest reading since early 2016, when 61.5 per cent of the 2,045 auctions cleared. Clearance rates have continued to track below 70 per cent since June the year; this is a considerably softer trend than what was seen over the same period last year when clearance rates were tracking around the mid 70 per cent range for most of the second half 2016. Results across each of the individual markets were varied this week, with Canberra recording the highest preliminary auction clearance rate of 72.9 per cent, while in Brisbane only 45.7 per cent of auctions cleared.
There were significantly fewer homes taken to auction across the combined capital cities this week, after last week saw volumes reach a year-to-date high (3,713). There were a total of 2,019 auctions held returning a preliminary auction clearance rate of 66.8 per cent, increasing on last week’s final clearance rate of 64.5 per cent. Over the corresponding week last year, 73.6 per cent of the 2,517 auction held were successful.
Melbourne saw the most notable decrease in volumes; the lower volumes a likely result of the upcoming Melbourne cup festivities and coming off the back of the busiest week for auctions ever recorded for the city last week, with only 309 held this week and 77.3 per cent clearing. Sydney’s preliminary auction clearance rate rose this week to 67.4 per cent, after last week’s final auction clearance rate fell to its lowest recorded since January 2016 (58.3 per cent), while volumes remained steady week-on-week. Performance across this remaining capital cities was varied this week, with Perth returning the lowest clearance rate of 30 per cent.
Preliminary clearance rates hold firm as volumes across the combined capital cities reach their highest level year-to-date and Melbourne records its busiest auction week on record.
This week, the combined capital cities saw the number of auctions held reach a new year-to-date high, with a total of 3,690 held, surpassing the previous 2017 high recorded over the week prior to Easter when 3,517 auctions were held. The higher volumes returned a preliminary auction clearance rate of 67.8 per cent, rising from a final clearance rate of 64.7 per cent last week, when fewer auctions were held (2,519). This week’s surge in volumes can be attributed to activity across Australia’s largest auction market in Melbourne, where volumes across the city reached their highest on record this week, with 1,983 held recording a preliminary auction clearance rate of 71.7 per cent. Sydney also saw a substantially higher volume of auctions this week with 1,196 homes taken to auction, recording a clearance rate of 64.1 per cent. Sydney’s clearance rate has been consistently below 65 per cent since the first week of October. Activity across the remaining auction markets was varied with Brisbane recording the lowest preliminary clearance rate (47.1 per cent). Historically auction volumes have peaked around late November / early December; if this trend holds true this year, we could see new records being set for auction volumes as the Spring season concludes.
According to the HIA-CoreLogic Residential Land Report, over the year to June 2017, residential land costs in key markets have soared to a new high with vacant land in Sydney now over $1,000 per square metre.
Price pressures in the market for residential land were most intense in Melbourne where the median price increased by 19.6 per cent over the previous 12 months. The pace of land price growth was also strong in Sydney (+9.8 per cent) and Adelaide (+8.0 per cent) over the same period. Land price gains were more modest in Perth (+5.0 per cent) and Brisbane (+0.1 per cent) over the same period. Hobart was the only capital city to experience a reduction in the median land price over the year to June 2017 (-15.8 per cent).
The report indicates that the median lot price nationally increased to $256,683, an increase of 8.5 per cent on a year earlier and across Australia, land turnover is down about 9 per cent on a year ago.
“Land supply policy has to be central to making real and sustainable progress on housing affordability. This requires improved outcomes with respect to financing of housing infrastructure, monitoring and timely reporting on land release and speeding up zoning and subdivision process,” said HIA’s Shane Garrett.
According to Eliza Owen, CoreLogic’s Commercial Research Analyst, “Record high lot prices over the past five quarters are likely to have contributed to worsening affordability and influenced the unprecedented level of high density residential development that is currently under construction.
“As the Australian economy shifts from residential to non-residential construction, demand for vacant residential land may shift in location and scope. New and prospective infrastructure developments such as the inland freight rail and Badgerys Creek Airport will open up new employment and development opportunities further from the metropolitan regions which may stimulate demand for housing in areas with a more affordable price tag,” concluded Eliza Owen.