Last weeks final result was a clearance rate of 50%, 15% lower than a year ago. So more evidence of the slowing market.
Today, Sydney reported 516 listed, but 214 sold an 74 withdrawn. Melbourne listed 821, sold 429 and 21 were withdrawn. Brisbane listed 69, sold 20 and 6 were withdrawn. Adelaide listed 51, sold 24 and 1 was withdrawn. Canberra listed39, sold 22 and 3 were withdrawn.
Today I want to look in more detail at the auction results over the past couple of years. I made a post recently which explained why we must take the auction clearance data from Domain and CoreLogic with a large pinch of salt, see “Auction Results Under The Microscope”. But that said, Doman’s latest data from yesterday’s auctions shows that volumes and values are well down. Anyone who wants evidence of how much the market has slowed, just compare the $1.4 billion each week a year ago, with $486 million today! The clearance rates will drop as more results come in, and it seems the volume of auctions initially listed compared with those that go head are significantly lower now.
But I have been looking back over the past couple of years, with a focus in the total value of property sold each week at auction. I have used the Domain datasets for this analysis.
We can chart the rolling average over 4 weeks of property sold at auction by value. Sydney and Melbourne tracked each other until around July last year, but since then Melbourne has been running at a higher rate than Sydney. The total value cleared each week as been as high as $1.6 billion or so in 2016, to around $600 million now. But the trends are not necessarily that clear because of events such as holidays. [Note: scale is in $m not 000’s].
However, if you overlay a trend line, it is clear that the average value of sales closed at auction in 2016 are significantly higher than now.
There was an initial falloff in early 2016 as the 30% speed limit for investment mortgages started to bite, but this was actually relatively short in duration, and sales values picked up in later 2016 and into early 2017. But as the second round of credit tightening, including the focus on interest only lending and tighter underwriting standards; sales value momentum fell significantly through the latter half of 2017 and is dropping away further as we travel through 2018. While the 2016 tightening can be regarded as just a minor credit crunch, the one we are in now is a whole different ball-game – this is a major credit crunch and may become business as normal – and a very different normal too boot.
To underscore that, the average value cleared in November 2016 was around $1.35 billion a week. This time last year the average was a lower $900 million a week, and it is now sitting at around $600 million a week, and falling. We expect this week’s final results to be around $500 million. So sales values are one third down on a year ago, and more than 50% lower than 18 months ago. This is a significant correction.
This drop is explained by a smaller number of auctions, and also the fact that lower priced property is selling relative to the upper echelons of the market. We discussed this in yesterday’s Property Imperative weekly. But it is also explained, and correlated with the tightening in credit. As we have discussed before, credit availability is the primary driver of home prices. Less credit means less demand, and falling prices.
As we expect continued market tightening, as credit continues to be controlled more tightly, we should expect auction values and volumes to continue to languish.
More evidence that we are indeed entering a new phase of the housing market, with significant risks on the downside. It’s just a question of how quickly we slide.
Anyone who wants evidence of how much the market has slowed, compared the $1.4 billion a year ago, with $486 million today! The clearance rates will drop as more results come in, and it seems the volume of auctions which happen are significantly lower than those listed.
Brisbane reported 38 auctions from 88 listings, and 22 sold, at 52%. Adelaide listed 53, reported 26 and sold 22 at 76%. Canberra listed 50, reported 42 and sold 27 at 61% cleared.
In Sydney, of the 670 listed, there were 336 reported auctions, 91 withdrawn, and a preliminary clearance rate of 56%, already lower than last week’s final measure of 56.5%.
In Melbourne, 942 were listed, 740 auctions reported and 463 sold, at 60%, compared with 57% last week’s final rate. The result will fall lower.
Brisbane listed 72 properties. reported 38 auctions and just 19 sold, at a clearance rate of 48%. Adelaide listed 69, reported 34 and sold 21 at 54% – 5 were withdrawn. Canberra listed 63, reported 53, sold 34 and 4 were withdrawn, giving a Domain clearance rate of 60%.
In this video we discuss how the results are collated and whether they can be trusted.
In Sydney 665 properties were listed and 291 were sold. 79 were withdrawn. Last week Sydney ended up with a 48.7% clearance result, so it will be interesting to see if there is any final recover today, as more results come in.
Melbourne listed 963 properties and 468 sold with 15 withdrawn. Last weeks final result was 57.3%.
Brisbane listed 82 and sold 22, with 3 withdrawn, Adelaide listed 57 and sold 25, with 6 withdrawn and Canberra listed 62 and sold 36 with 3 withdrawn.
For more on how the results are collated, and how believable they are see, see our video “Auction Results Under The Microscope”.
Domain have released their preliminary auction clearance results and the weakness in the stats continues, both in terms of volumes and clearance rates. The final results will settle lower still. They are way down on last years.
There is also a larger drop between those listed for auction compared with those auctioned.
In Canberra, 58 were listed for auction and 36 sold. In Brisbane 107 were listed and 27 sold. In Adelaide 68 were listed and 29 sold.
You can watch our recent video blog where we discussed how the auction results are calculated and how reliable they may be, especially in a falling market.
Sydney looks lower again, both in terms of volume and preliminary clearance, Melbourne is lower on volume, and the final rate will settle lower. So the lower momentum compared with last year continues
Brisbane listed 122 auctions, but sold 45 with 9 withdrawn, Adelaide listed 72 and sold 27, with 2 withdrawn, and Canberra listed 55 with 37 sold and 1 withdrawn.
Watch our video on whether these numbers are likely to be an accurate reflection.
The trends are continuing with Sydney leading the way lower, with a final rate last week of 48.1% and a lower number of reported auctions this week. Melbourne is a little stronger, but still at a lower clearance rate than last year. We continue to see lower numbers of actual auctions, compared with listed, as more are withdrawn prior to auction, or rescheduled.
Brisbane had 72 listed for auctions, and 18 were sold, Adelaide had 69 listed and 26 sold, and Canberra had 75 listed and 49 sold. So in the smaller markets, Canberra looks the strongest. The final results will settle later in the week.
You can watch our video on how the results are collated and whether they are meaningful.
The latest preliminary results from Domain are in. The volumes are a little higher this week, and the clearance rates may be higher also, though they will settle lower. The rates though remain below those from last year.
Brisbane reported that of the 103 listed properties, 50 went to auction and 29 sold. Adelaide reported that of the 91 listed for auction, 48 were auctioned and 34 sold. Canberra reported 82 listed for auction, 62 reported auctions and 40 sold.
Last weeks final result was a clearance rate of 50%, 15% lower than a year ago. So more evidence of the slowing market.
Today, Sydney reported 516 listed, but 214 sold an 74 withdrawn. Melbourne listed 821, sold 429 and 21 were withdrawn. Brisbane listed 69, sold 20 and 6 were withdrawn. Adelaide listed 51, sold 24 and 1 was withdrawn. Canberra listed39, sold 22 and 3 were withdrawn.
