National auction clearance rate falls below 50 percent as unsold homes rise

By Jiali Hong- “Student journalists at the University of Melbourne”

Australia’s national auction clearance rate has fallen to its lowest level in three months, as the number of unsold homes and distressed property sales continues to increase. The national clearance rate fell to 48.2 per cent last week, the lowest level since late June, when it reached 47.4 per cent, according to Cotality.

A total of 1,223 auctions were held across the capital cities, 12.8 per cent fewer than the previous week and 47.5 per cent lower than the same week last year. Sydney recorded 304 auctions, down 61 per cent from the previous week and 38.5 per cent from a year earlier.Melbourne recorded 670 auctions, an increase of 136 per cent from the previous week but a 45.6 per cent fall compared with the same period last year.

The sharp weekly increase in Melbourne was partly due to the low number of auctions held during the previous week’s long weekend, meaning the rise does not necessarily indicate an improvement in the market.Across Australia, about 276,000 properties remained unsold, an increase of 21.6 per cent compared with a year earlier, according to SQM Research.

Properties that had remained on the market for more than 180 days also increased by 10.5 per cent year on year. There were 4,872 distressed property sales in September, up 29 per cent from the same month last year. A distressed sale generally refers to a property sold under financial pressure, such as when an owner is unable to meet mortgage repayments or faces another urgent financial need.

Cotality research director Tim Lawless attributed the weak auction results partly to long weekends in some states and the Reserve Bank’s decision to raise interest rates for a fourth time this year. SQM Research managing director Louis Christopher said the situation in Sydney pointed to weaker demand rather than a sudden increase in new listings.

“In Sydney, fewer vendors are listing than a year ago, yet total stock is up almost a fifth. That’s a demand problem, not a supply surge,” Mr Christopher said. The latest figures show weaker auction activity and rising unsold stock in several parts of the housing market, although the data does not by itself indicate where property prices will move next.

Sources

ABC News
Cotality
SQM Research