Uncertainty sees preliminary clearance rate take a hit, but Brisbane remains relatively stable
Despite the escalating health crisis and economic fallout related to coronavirus, this week was the second busiest for auction activity so far this year with 2,539 homes taken to auction across the combined capital cities, returning a preliminary auction clearance rate of 61.3% which is still substantially higher than a year ago when values were falling, but well down on the recent highs.
This week’s preliminary auction results mark a turning point in buyer and seller sentiment, with withdrawal rates rising as vendors think twice about testing the market and buyers losing confidence or choosing to avoid public gatherings. Prior to this weekend, the year-to-date withdrawal rate across the preliminary reading was averaging around 5% across the combined capital cities, rising to just over 8% on Sunday’s numbers. In Brisbane, auctions were marginally lower at 105, down from 121 same time last year.
It’s possible we’ll see more vendors choosing to withdraw from the market until confidence and selling conditions improve. Clearance rates also taken a hit this week in some capital cities. It’s likely that the preliminary auction clearance rate of 61.3% will revise down to below 60% for the first time since mid-2019 as remaining results are collected. In comparison, the previous week saw 2,274 homes taken to auction returning a preliminary auction clearance rate of 70.6%, before revising down to a final clearance rate of 65.3%. While the clearance rate has fallen, it remains stronger than this time last year when 1,667 homes were taken to auction and a clearance rate of 50.9% was recorded. In Brisbane, clearance rates were higher at 39.4% over the weekend, up from 28.2% same time last year.
To date there is no evidence of reduced housing values, however it is clear that transactional activity will be temporarily disrupted in coming weeks and months. The extent of this disruption depends on how long it takes to contain the virus and for sentiment to recover.