Auctions to start with a ‘whimper rather than a bang’: CoreLogic

Australia’s auction market is expected to start “with a whimper rather than a bang” as it returns in full despite a slight seasonal uptick in clearance rates and volumes in the final months of 2022, CoreLogic has said.

As the nation returns to full capacity following the summer holidays and Australia Day festivities, auctions are expected to return in full this weekend (28–29 January).

There are 708 capital city homes scheduled for auction this week — down 64.7 per cent on the same week last year.

Melbourne is set to host the most auctions this week, with 262 homes set to go under the hammer. Around 206 homes are scheduled for auction in Sydney, while Adelaide will see 104 homes go under the hammer.

However, CoreLogic’s research director Tim Lawless has forecast that activity will be tempered for auctions this week.

He commented: “When clearance rates start being reported again through late January and February, it’s likely we’ll see them recommence where they left off at the end of 2022, particularly in the larger auction cities of Sydney and Melbourne and to a lesser extent Canberra, where more listings go under the hammer.”

According to CoreLogic’s most recent Quarterly Auction Market Review, which covers auction activity in the combined capitals during the final quarter of the calendar year 2022, auctions were “well-below” the decade average of 65 per cent, hovering at 57.8 per cent.

“We also anticipate at least one more rate hike which means we’re likely to see fewer properties go to auction as vendors may not be willing to test the market, opting to hold their property off the market altogether or list via a private treaty campaign,” Mr Lawless said.

Indeed, Mr Lawless flagged that — since peaking in March 2021 — quarterly auction clearance rates have been trending lower.

Over the 2022 calendar year, 103,911 properties went under the hammer across the combined capitals, resulting in an annual clearance rate of 61.2 per cent. Comparatively, in the property boom year of 2021, there were 116,711 residential auctions held and a clearance rate of 74 per cent.

“Auction volumes were well below the numbers seen only 12 months ago, when a record-breaking 42,918 homes were taken to auction across the combined capitals over the December 2021 quarter, the busiest quarter since CoreLogic auction records commenced in 2008,” Mr Lawless said.

“The clearance rate during that time was also significantly higher at 71.3 per cent, which reflects the feverish buyer activity in late 2021 given the record-low interest rate environment, tight stock levels and rapidly rising housing prices.”

While the December 2022 quarter was the first to show some improvement in auction activity, this was mostly in the first two months of the quarter (when the combined capital cities clearance rates held around the 60 per cent range. By December, however, clearance rates trended lower, finishing the year in the low 50 per cent range.

Mr Lawless said that the below-average clearance rates at the end of 2022 were also accompanied by a trend towards fewer home sales. 

“Over the past two decades during each of the downturns, we’ve seen the volume of home sales drop by about 25 per cent, which is remarkable given every downturn has been different,” he said.

“The trend in home sales through the current downturn is likely to be similar, with annual sales already down an estimated 17 per cent from the December 2021 peak. Private treaty metrics are showing a similar trend to the auction market, with homes taking longer to sell and vendors applying larger discounts.”

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