Nervous Vendors Withdraw from Auctions Down Under

Close to 30% of homes listed for auction in Sydney were withdrawn in the past week as nervous vendors retreated in the face of a cooling market.

Those withdrawals were not due to properties selling before auction – a figure which is tallied separately, but as a result of tepid interest from prospective buyers ahead of the listed auction, which can result in no registrations to bid in some cases.

So far, auction volumes remain relatively strong compared to longer-term averages, although the crunch will come in the spring selling season, when clearance rates could fall further, according to Mr Christopher, and vendors must decide if they want to sell through the auction market.

In Sydney, 28% of scheduled auctions were withdrawn, the highest rate since April 2020, according to CoreLogic figures.

Despite the withdrawals, preliminary clearance rates in Sydney nudged upwards for the first time in five weeks, hitting 55.9%. Last week’s preliminary result was 55.4% in Sydney, revised down to 52.7% at final numbers.

In Melbourne, still the busiest market in the past week despite listings falling by 22.3%, the preliminary clearance rate rose above 60% for the first time in four weeks to 61%.

Nationally, there were 2358 homes listed for auction across the capitals, with the volume down 6.7% on the previous week. Just under 60% of homes sold, on CoreLogic’s preliminary tally.

Among the successes was the $3.04 million sale of a semi-detached house in the Sydney suburb of Clovelly. There were three bidders for the four-bedroom home at 27 Clifton Road, who pushed the price $40,000 over reserve.

Ray White NSW chief auctioneer Alex Pattaro, whose agency sold the Clovelly house, said the auctions market had settled into its typical winter mode.

“We saw less activity across our properties, though good properties are still obtaining higher numbers of interested buyers and obtaining the best prices,” he said.

“Property prices are still holding strong, especially in affordable suburbs. We are expecting less auction volume to come to market over the coming weeks compared to previous years.”

But that shrinking pool of new listings could ultimately lead to better prices if more buyers are bidding, Mr Pattaro said.

As rates rise and buyers’ borrowing capacity is reduced, most analysts expect the housing market correction to deepen and extend beyond Sydney and Melbourne to the other capitals. Sydney’s prices could fall close to 20% by end of next year before the correction is over, according to ANZ.

Nevertheless, Mr Christopher said the latest auction results showed the market was experiencing an “ongoing downturn, not an outright crash”

“It’s still somewhat orderly, although quite clearly prices are falling,” he said. “So, vendors need to expect that if they want to sell in this market, they can’t have expectations above the market. Otherwise, they are not going to sell.”

Among the smaller capitals, Adelaide was the busiest, hosting 173 auction listings and recording the highest clearance rate of 68.8%. Brisbane achieved a preliminary rate of 65.4 % from 161 listings, while Canberra recorded a 62% clearance rate from 121 auctions, on CoreLogic’s preliminary results.

By Nick Lenaghan, Property Editor Financial Review, www.afr.com