Auction withdrawals swell amid social distancing

Auction volumes were down by 27 per cent in the June 2020 quarter compared with the March quarter, and were 24 per cent lower than this quarter last year, according to CoreLogic’s quarterly summary.

There were 13,783 auctions held in the June quarter, compared with 18,902 auctions held in the March quarter, and 18,104 auctions held in this quarter last year.

The spike in withdrawal rates were particularly noteworthy, with nearly a third (31 per cent) of the 11,956 auction results collected over the latest quarter reporting a withdrawn result. This was significantly higher than the 6.1 per cent withdrawn over the March quarter.

CoreLogic outlined that the first six weeks of the quarter saw withdrawal rates as high as 56 per cent, as it coincided with tightened social movement restrictions that resulted in the banning of on-site auctions, which came into effect at midnight on 25 March to curb the spread of the coronavirus.

Vendors sought out alternative methods of sale or chose to postpone until conditions improved. Withdrawal rates began to normalise by mid-May.

CoreLogic head of research Eliza Owen said the latest quarterly auction results came as no surprise as Australia was hit with significant disruptions to usual business practices during this period. As the coronavirus continued to spread in the first quarter of the year, social distancing measures were increased immediately prior to the June quarter.

“The initial market response to COVID-19 was a severe drop in sales and listings across both auction and private treaty sales methods,” Ms Owen said.

“Many vendors who did not have to sell were initially unwilling to take their property to market in a time of high uncertainty.”

Ms Owen noted that this contributed to a decline in sales volumes of 32.4 per cent over April.

“However, following this initial shock, transaction activity has steadily recovered as social distancing measures erased, and consumer confidence levels experienced a strong recovery in May and June,” she said.

Auction numbers remained below 1,000 across the combined capital cities in May, plummeting to a low of 417 over the week ending 17 May.

However, as restrictions were relaxed in Australia, auction volumes increased in June across the combined capital cities, with 1,485 auctions held over the week ending 28 June.

The combined capital city auction clearance rate fell substantially over the three months to June, down from 62.5 per cent over the March quarter to 47.9 per cent.

This is the lowest level since the December 2018 quarter, when the clearance rate was 43.6 per cent.

A high volume of withdrawn auctions dragged down the clearance rates in April to below 50 per cent across the combined capital cities. The highest weekly clearance rate recorded in April was 41.1 per cent during the week ending 26 April.

Since then, the clearance rate has begun to improve, with the week ending 28 June recording a weighted average clearance rate of 60.6 per cent.

Capital city results

Sydney’s auction clearance rate over the June quarter was 51.5 per cent, which was the lowest quarterly result recorded since the December 2018 quarter (43.1 per cent). There were 6,372 auctions held over the June quarter, down from 7,135 auctions in March and 6,776 auctions in the 2019 June quarter.

Melbourne recorded a clearance rate of 45.9 per cent over the June quarter, down from 63.8 per cent over the previous quarter, and 59.5 per cent over the June 2019 quarter.

In terms of auction volumes, there were 5,369 homes scheduled for auction in Melbourne over the June quarter, down from 8,882 over the March quarter and 7,838 over the June 2019 quarter.

Tasmania recorded a clearance rate of just 11.1 per cent over a low volume base of 25 auctions in the June quarter. In the March quarter, it recorded a 51.3 per cent clearance rate over 66 auctions.

There were 799 auctions held in Brisbane over the June quarter with a clearance rate of 34.2 per cent. This compares with 1,066 auctions in the March quarter with a clearance rate of 41.7 per cent.

Auctions volumes reduced from 827 in the March quarter to only 450 in the June quarter in Adelaide, with a clearance rate of 44.7 per cent. There were 1,082 auctions held in the 2019 June quarter.

Canberra recorded a clearance rate of 58.7 per cent from 576 auctions in the June quarter, which compares with 639 auctions and a clearance rate of 65.1 per cent in the March quarter. Auction volumes were largely in line with volumes in the June 2019 quarter, when 578 homes went under the hammer and there was a recorded clearance rate of 50.8 per cent.

[Related: Property resale profits slump over March quarter]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.