The Australian auction market in the capital cities responded strongly to the recent rate cut, exhibiting an increase in auction activity and more favourable clearance rates. This response is in line with previous behaviour observed after rate reductions—interest rates are a powerful motivator for heightened market activity.
Overall Market Response
In the week following the rate cut, the total capital city auctions increased to 2,512 from 1,784, reflecting a week-over-week gain of 40.8%. Such a sharp uptick in volume surpasses any reasonable benchmark of active engagement in the market. Meanwhile, the preliminary clearance rate for auctions also increased to 71.3%, which represents the second-highest early clearance rate recorded this year. Overall, this illustrates that decreased rates further incentivize purchasing, enhancing buyers’ participation in auctions.
City-by-City Analysis
➤Melbourne
The preliminary clearance rate for the Melbourne auctions remained at 73.7%, which is among the previous week’s initial estimate of 73.8% (the finalized figure was down to 68.0%). This marks the 4th preliminary week in a row where the auction clearance rate is above 70, which shows stable confidence and interest from buyers in the Melbourne market.
➤Sydney
Additionally, the growth in auction activities in Sydney saw 814 residential properties headed to auction. Further, the figure is the highest since the week before Easter, when 1282 auctions were conducted in comparison. Sydney’s preliminary clearance rate also increased by 72.2%, marking the first time in over 10 weeks of trading under this mark.
The past week’s clearance rate of 65.3 % marks a significant recovery in market activity after the rate reduction.
➤Brisbane culminated with the highest number of auctions amongst the smaller capital cities, with 201 houses auctioned last week. This is the second-highest weekly auction volume so far this year. However, the preliminary clearance rate still performed rather lacklustre at 58.5 %, a decrease from 59.6 % a week prior and lower than the recent peak of 69.7 % two weeks ago.
➤Adelaide, there was a slight dip in auction activity, with 120 homes listed compared to 130 in the preceding week. Regardless of the reduced volume, the preliminary clearance surged significantly to 74.6 %, an increase from 64.1 % a week prior.
Auction Activity Analysis
The rise in auction activity is expected to continue this week, with roughly 2750 homes set to auction. Cotality, the vendor, gathers during the week roughly 99% of auction data, which provides detailed results for calculating clearance rates, which adds value to the result accuracy and helps in evaluating market trends and decision-making.
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