Property clearance rate drop is “natural” as auction volumes surge, says expert
National auction clearance rates are struggling to find the same heights as earlier in the year, off the back of a huge weekend for the property market.
According to RP Data, a massive 3,692 properties went under the hammer over the weekend, notching up the same 66.6% national clearance rate as last week, with the two biggest auction cities battling to find the demand for greater supply.
Sydney struggled in the face of greater supply, with only 71.7% of 1,378 homes selling at the auction block – the lowest level in 18 months, according to The Australian.
On a substantial Super Saturday in Melbourne, which saw 1,823 properties up for auction, Melbourne cleared 67.1%.
Frank Valentic, buyers advocate from Advantage Property Consulting, said the two week drop in clearance rates is “not evidence of a crash” and not something to concern sellers.
“It’s a sign of the large volume we’ve had over the last two months,” says Valentic.
“The market is just catching up with itself. It’s a natural thing when we see greater supply and each week we are seeing a large volumes of auctions.”
Valentic says around 10,000 properties have gone to auction in the last eight weeks, with considerably more Super Saturdays in Melbourne than last year.
“This shows there is confidence in the market and in the auction method,” he says.
“There is confidence that if you put your house on the market, you’ll get a sold sticker on it and a reasonable price.”
While Valentic says there are signs the Melbourne apartment market is softening due to an oversupply in inner suburbs, he says house prices are still “bulletproof”.
But he believes the clearance rate drops are not a sign the market swinging back in favour of buyers, saying there are still opportunities for both sellers and buyers to find excellent results.
“There are always opportunities to buy well and buy badly in any market. Anything with a wow factor will always be in demand,” Valentic says, giving the example of a property in Montague Street Albert Park, which sold for $675,000 above reserve at the weekend.
Valentic says the market is showing solid and sustained growth, unlike the heights and troughs of previous years, such as the boom of 2010.
He believes 2015 will begin with solid clearance rates in the mid-70’s, after the market takes a break for the Christmas period.
This article first appeared on SmartCompany.