Buyers Scoff at Biggest February Auction Weekend Ever
Auction Results for week ending February 26, 2017.
This week we saw a dramatic increase in volume as the number of properties taken to auction reached 3,232, a new record high for the month of February. Despite the flood of supply, demand surged even higher. The combined capital city preliminary clearance rate reached a new record high for the year-to-date, with 78.6 percent of auctions finding a winning bidder.
Last year over the same weekend, 71.4 percent of auctions were successful, and volume was considerably lower at 2,701. In 2016, it was the third week of March before we saw volume at this week’s level.
The City Stats
Sydney’s demand remains out in front, with buyers there recording a preliminary auction clearance rate of 81.5 percent, up from 80.6 percent last week. Last year at this time, only 72.1 percent of auctions were successful. Auction volume in Sydney was up to 1,169 from 856 last week. Over the same week last year, 919 homes were taken to auction.
Melbourne buyers posted a preliminary result of 80.1 percent, up from 75.7 percent last week and much stronger than last year’s success rate of 74.8 percent. Demand spiked even with a substantial increase in volume. A total of 1,613 auctions were held, up from 1,091 last week and also higher than last year’s volume of 1,347 over the corresponding week.
While the east coast continues its mammoth run higher, out west it’s a different story, where vendors struggled to close 1 in 5 auctions. The clearance rate in Perth was an abysmal 21.4 percent.
The Graph
The Preliminary Numbers
Sydney | Melbourne | Brisbane | Adelaide | Perth | Tasmania | Canberra | |
Clearance Rate | 81.5% | 80.1% | 63.6% | 76.3% | 21.4% | 50.0% | 77.3% |
Auctions | 1,169 | 1,613 | 174 | 121 | 46 | 6 | 100 |
The Analysis
To say that buyers passed the test this week is an understatement. Low interest rates and a strong job market continue to provide a huge flow of demand. Home prices in Sydney and Melbourne continued their run higher. Here are the latest capital city home value change results from CoreLogic:
As you can see, price growth in Brisbane took a breather this week and home prices in Perth continued their retreat.
What It Means For Investors
If prices continue to rise in Sydney and Melbourne, expect to see regulators step in to attempt to curb investor demand. Whether that would mean targeted lending restrictions from APRA or changes to tax incentives from politicians is yet to be seen. My money’s on APRA.
So far, the answer from policy makers has been to attempt to boost supply. Victorian leaders announced plans this week for 17 new suburbs up to 50km from Melbourne’s CBD, adding about 100,000 new homes to the market. So much for time with the kids after that commute.
Higher iron ore prices have provided a boost to our balance of trade and an anticipated increase in our GDP. It should be enough to lift us back into growth territory and avoid the dreaded technical recession that economists had feared. This will be welcomed news to the RBA who will now have a narrative for why further interest rate cuts remain unnecessary. I won’t be holding my breath for a rate hike, though.
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The results listed here are based on preliminary reporting by CoreLogic. The final results will be reported in next week’s post.
For the historical data of weekly auction clearance rates, click here.
Comments
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Hi Jason,
As I had noted earlier, Brisbane has once again got above the 60% mark for successful auctions. Two weeks ago, it did this – for the first time in about 15 months !!
I decided to take a harder look – as you know, I have a soft spot for Brisbane. So I spreadsheeted the last two years of info you had provided (thanks for that) and found:-
In all cases for 2015 and 2016 where Brisbane exceeded 60% clearance, they were slow weeks, and the resulting sales were actually BELOW the usual average. The average sales at auction for Brisbane for 2015 and 2016 have been just short of 80 properties each week.
On several occasions where sales exceeded 100 sales, one week either side would be really low, bringing the average back down to about 80.
But now (strike up the band !!) in 2017 we have already exceeded 60% twice, and, in each case, the resulting sales have been BETTER than that average. 85 one week, and 111 the other – is this an early sign of better things to come for Brisbane? Hmmmm !!
I’ll keep half an eye on Brisvegas and update you as and when notable things happen – like, its first 70% week !! ;)
Benny