Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter
subscribe to our newsletter

Auction ban drives up withdrawal rates

The number of owners withdrawing their property from auction soared to 40 per cent last week, following the introduction of a ban on auctions and open homes, according to CoreLogic.

Social distancing measures introduced by the federal government over the last week to limit the spread of COVID-19 – including a formal ban on auctions and open homes – have stalled the number of properties being sold.

According to CoreLogic, in the week ending 29 March, 3,203 homes across capital cities were set to go under the hammer. This would have made it the busiest week for auction activity so far in 2020.

Advertisement
Advertisement

However, due to the government restrictions coming into play on 25 March that banned in-house and on-site auctions, 40 per cent of those properties were withdrawn from auction.

The withdrawal rate shot up from just 7.5 per cent the previous week, according to property research group CoreLogic.

The remaining 60 per cent of auctions were forced onto online and remote platforms and returned a preliminary clearance rate of 51.4 per cent, the lowest preliminary rate recorded since June 2019.

Additionally, CoreLogic expects this figure to be revised further downwards as more accurate information and results are recorded.

Comparatively, the previous week saw a final clearance rate of 56.9 per cent across 2,599 auctions, whereas the same week last year saw a 50.9 per cent clearance rate across 2,164 auctions.

According to CoreLogic, the surge in auction withdrawal was anticipated by industry figures, considering rising levels of uncertainty on behalf of both buyers and sellers in this market, as well as the shift towards remote and online auctions, which could take some time for the market to adjust to.

Further, some reports from the week have seen agents battle technical challenges and connectivity issues, all of which will likely be resolved with additional preparation time, according to the research group.

The data for the week ending 29 March also suggested that there was a surge in the proportion of properties sold prior to auction, up from 22 per cent last week to 36 per cent.

CoreLogic speculated that home owners could have decided to bring forward the date of their auction in order to beat the introduction of the auction ban or have been motivated to sell their property before lockdown policies potentially escalate.

Looking forward, the coming months are likely to see substantially fewer auctions than normal, the property research group stated.

“We may see some vendors choose to convert their listing to a private treaty method, while others will likely pull their property from the market all together until confidence and selling conditions improve,” CoreLogic outlined in a statement.

“The auctions that proceed will likely utilise digital platforms such as Gavl or AuctionNow as well as proprietary platforms from the major real estate groups.”

Overall, CoreLogic is expecting to see a “substantial drop” in new property listings over the coming weeks, as buyers and sellers retreat to the sidelines and wait for some certainty to return to the market. 

[Related: Housing market to see ‘sharp rebound’: La Trobe Financial]

Auction ban drives up withdrawal rates
Auction ban drives up withdrawal rates
mortgagebusiness

Hannah Dowling

Hannah Dowling is a journalist for mortgage business, the leading source of news, opinion and strategy for professionals working in the mortgage industry.

Prior to joining the team at Mortgage Business, Hannah worked as a content producer for a podcast catering to property investors. She also spent 6 years working in the real estate sector at a local agency. 

Hannah graduated from Macquarie University with a Bachelor of Media and Journalism. 

You can email Hannah at: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

Westpac was the only big four bank to kick off the June quarter with a contraction in its mortgage book, according to the latest APRA data....

There’s a limit to what monetary policy can do to manage economic cycles in the foreseeable future, the Reserve Bank governor has said bef...

The government has announced that it has now finalised its “enhanced” regulatory sandbox, allowing fintechs to test the viability of new...

FROM THE WEB
podcast

LATEST PODCAST: Property remains a stable asset despite cautious market

Do you expect COVID-19 to reduce or increase your business flows?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.