Status Quo

Date: 23/06/2015

Results for week ending June 21

Auction clearance rates were hot again in Sydney and Melbourne with results of 83.9% and 79.2% respectively. The national average remained a very consistent 77.7%.

The Stat

Auction clearance rates report the number of properties sold compared to the number of properties offered up for auction. A figure of 80% and above indicates a strong performance. The real estate industry aims for 70%.

The Graph

The Numbers

Auction Clearance Rates
Week Ending 21/06/15	Clearance Rate	Auctions
Sydney	83.9%	847
Melbourne	79.2%	1047
Brisbane	55.4%	122
Adelaide	62.3%	81
Perth	26.3%	45
Tasmania	83.3%	12
Canberra	67.5%	53
Source – Corelogic RPData

The Analysis

Sydney’s auction clearance results have come off a peak over the last month but still remain extremely hot at 83.9%. Properties continue to sell well above reserve across the board. A derelict property in Busby sold for $610,000 – $210,000 above reserve. If you crunch the numbers it equates to more than a 50% mark up on the property in one afternoon. Wow!

Melbourne also had it’s ‘foot to the floor’ with a clearance rate of 79.2%. An interesting article reflecting on some of Melbourne’s trends, especially the stronger performances in certain areas of the city and the resultant ripple effect, can be found here.

And I need to make comment on the high result of 83.3% in Tasmania. I have mentioned previously that Tasmania is a place where things may well start to happen. But this week’s results more reflect the volatility in results you’d expect from small numbers of auctions. You can see here how Tasmania has tracked in their auction numbers since my series of articles began.

What It Means For Investors

Sydney and Melbourne are flying and the remainder of the country is far less enthused. With no change in interest rates we are pretty much keeping the status quo with clearance rates. In the east there is no visible slowing of supply nor is there a shortage of buyers. So the prospect of an unseasonably warm winter in Sydney and Melbourne remains on the cards. And while low interest rates may be unduly fuelling aspects of the property market to the benefit of some, the impact of a low interest rate environment comes with other risks that investors need to manage.

For past auction clearance rate data, please refer here.

By Andrew Stow

Andrew undertakes residential property developments and has been a moderator for propertyinvesting.com for five years. Andrew’s business background is in outsourced customer service where he was a statistical analyst and workforce planner servicing programmes for top 100 companies.