How Low Can We Go?

Date: 10/11/2015

Results for week ending November 8.

Melbourne and the combined capital city results were stronger this week, but Sydney continued its plunge to hit a new three-year low. With no bottom in sight, it’s anyone’s guess how low auction clearance rates will go.

The Stats

As expected, Melbourne supply swelled this weekend in the wake of the Spring Racing Carnival. The clearance rate surged nearly four points to 69.3 percent on 1,189 properties taken to auction.

Sydney didn’t fair so well. According to RP Data, preliminary results showed only 61.9 percent of auctions clearing. Domain’s initial figures were even bleaker, reporting a clearance rate of only 59.2 percent.

Perth also took one on the chin this weekend, with a miserable 17.9 percent of 44 auctions finding buyers.

The Graph

The Numbers

	Sydney	Melbourne	Brisbane	Adelaide	Perth	Tasmania	Canberra
Clearance Rate	61.9%	69.3%	42.2%	64.0%	17.9%	22.2%	78.3%
Auctions	1,222	1,189	167	143	44	9	119

The Analysis

Areas of Sydney are now clearly buyers’ markets. The West and North West failed to clear even 40 percent of auctions; and Canterbury, Bankstown and the Central Coast couldn’t make it past the 50 percent barrier. With around 6000 homes still coming to auction before Christmas, expect buyers to continue to gain control throughout Sydney.

While Melbourne saw an improvement, if we take the Cup weekend figures out of the chart, the trend line continued down. Next week will be the true test, as punters coming back out to bid may have skewed recent demand.

What the market holds beyond Christmas will be in the hands of the RBA.

What It Means For Investors

Melbourne vendors: take courage that a few irrational buyers may still be lurking in the Eastern suburbs. The owner of this modern five-bedroom home in Doncaster fetched a profit of over $1 million in just twelve months.

According to a recent PIPA survey, one in five investors claim to have put their real estate plans on hold, in fear of a market correction. With clearance rates rapidly approaching the point at which prices have historically declined, if you’re still making offers, exercise extreme prudence.

For the historical data of weekly auction clearance rates, click here.

By Jason Staggers

Jason was a personal mentor working with Steve McKnight's Property Apprentices. He helped hundreds of investors apply Steve's teachings in the real world and achieve greater results on their journey to financial freedom. Jason now lives in Perth, WA where he leads Neuma Church.