New data from CoreLogic has shown last week’s auction activity had plunged across all capital cities, with 1,676 auctions held across the state capital, down by 41.8 per cent from the week prior.
However, the number of homes auctioned was significantly higher than the last federal election week, in May 2019, when there were 930 properties auctioned.
The combined capitals’ preliminary clearance rate slipped to its lowest level so far in 2022, down to 62.9 per cent of the properties returning a sale.
In contrast, during the same week a year earlier, 75.6 per cent of 2,838 auctions across Australia had been successful.
The result was also down by 1.7 percentage points from the previous week’s result of 64.6 per cent, which was revised down to 60.1 per cent at final figures.
However, there could be an uptick in activity following the last days leading up to the election, as more than 3,000 homes are scheduled to go under the hammer for the week ahead – the highest level of activity since the week before Easter.
Shifting cash rate shakes affordability
Kaytlin Ezzy, research analyst at CoreLogic commented the May cash rate rise had also added downward pressure to dwelling values, with multiple more rate hikes expected to come.
At a national level, house price growth slowed by 10 bps during April across both houses (growing by 0.7 per cent) and units (0.2 per cent).
However, the increase in affordability could be partially or entirely offset by the rise in mortgage repayments caused by higher interest rates, Ms Ezzy wrote.
She referred to recent research from CoreLogic and Australian National University, commenting a 2.25 per cent rise in interest rates coupled with a 10 per cent fall in house prices would see monthly repayments on new mortgages with a 20 per cent deposit increase by $439.
For those with a 5 per cent deposit, monthly repayments were calculated to rise by $521.
“The same research found that as of March 2022, the average capital city house required 46.3 per cent of the average household income to service the typical mortgage, while capital city units required 32.2 per cent,” Ms Ezzy wrote.
“With rising interest rates likely to worsen serviceability, it is possible demand will shift from the lower density sector to the unit segment as buyers look for a more affordable option.”
Meanwhile, ANZ senior economists recently tipped that rising mortgage rates would erode house prices, forecasting a 3 per cent national fall for 2022, followed by a further 8 per cent decline in 2023.
Looking across cities for the past week, auction activity was down in all of the state capitals, with the exception of Perth.
Melbourne and Sydney saw roughly half the number of auctions both year-on-year and from the week before.
Melbourne slid by 45.1 per cent from the previous year to 709, while Sydney, in its quietest week since the Easter long weekend, hosted 535 auctions, down 51.5 per cent.
Melbourne’s preliminary clearance rate of 61.9 per cent also overtook the previous week as its lowest for the year to date – while a year before, 74.9 per cent of the Victorian capital’s auctions had been successful.
For Sydney, its 61.7 per cent preliminary clearance rate was higher than the previous week’s 61.1 per cent (revised later to 53.8 per cent), but it was markedly lower than the 76.9 per cent sold the year before.
Across the smaller capitals, Canberra had the highest clearest rate, selling at 76 per cent of its 91 auctions.
Adelaide followed, with 68 per cent of its 196 homes being cleared, as well as Brisbane, with its clearance of 62.9 per cent across its 127 auctions.
However, the three cities had all dipped year-on-year, with Canberra down by almost 10 percentage points, Brisbane slipping by around 2 and Adelaide declining by 9.6 percentage points.
Of the 12 auctions observed in Perth, three were successful, while there were no auctions in Tasmania.
[Related: Election 2022: What’s next for housing?]