CoreLogic has predicted that vendors will retreat from auctions – which have been a popular sales method, particularly in the eastern seaboard – as the impact of COVID-19 continues to permeate the housing market.
Following on from the government ban on public auctions, open homes and public gatherings of more than two individuals, vendors and real estate agents have been holding digital auctions, but numbers are not expected to reach their heights they did earlier this year.
Over the three months to March 2020, the clearance rate across the combined capital cities came in at 62.5 per cent over 18,902 auctions, according to CoreLogic data.
Both auction volumes and clearance rates fell when compared with the previous quarter, when 26,923 properties were taken to auction, returning an average clearance rate of 70.3 per cent.
However, the March 2020 quarter recorded an improvement on the results of the March 2019 quarter, when 49.9 per cent of 14,647 auctions were successful.
The uncertainties of the COVID-19 outbreak, in conjunction with tightened social distancing restrictions, saw clearance rates in late March take a hit, with the final week of the month seeing the clearance rate fall to just 37.3 per cent across the combined capitals.
Compared with the previous month, weekly clearance rates in February were in the low 70 per cent range for the last three weeks of the month (before revising lower on a weekly basis for the remainder of the quarter).
Looking forward, CoreLogic anticipates that auction activity – and sales activity more generally – will pick back up again whenever market confidence and selling conditions improve. However, until then, many owners will sit tight or sell via private treaty.
Auctions that do go ahead amid the restrictions will do so with the use of digital auction platforms.
CoreLogic head of research Eliza Owen noted that there are “various pressures” that have contributed to the decline in the March quarter auction clearance rate.
“The banning of onsite auctions and open homes have physically prevented some auctions from going ahead or prompted vendors to pull out of the market,” she said.
“Withdrawal rates surged from an average of around 6 per cent to 50.2 per cent in the week ending 29th of March.”
Ms Owen continued: “More broadly, the ANZ-Roy Morgan consumer sentiment index plummeted 9.8 per cent over the same week, signifying that rising job losses and uncertainty has dampened property demand.
“Before the onset of the coronavirus, affordability constraints had already started to slow momentum in the property market, and this is reaffirmed by a decline in the combined capital city dwelling growth to 0.7 per cent in the month,” she said.
“Looking ahead, the next few months will present an unprecedented challenge to the auction market and the housing market more broadly.
“However, once the virus is contained, property is looking increasingly better placed for a recovery because of the high levels of monetary and fiscal stimulus available,” Ms Owen concluded.
[Related: Auction withdrawal rates continue to climb]
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.