Australia sees second-busiest start to auction season on record

With the summer holidays having wrapped up, auction activity has come back with a bang, according to property insights house CoreLogic.

According to the company, there were a total of 1,671 auctions held across the combined capitals last week (ended 4 February), the second-biggest start to the auction season since CoreLogic auction records commenced in 2008. The only other first week of February that has had a higher number was recorded in February 2022, when 1,779 auctions took place.

When compared to the same period last year (when 1,322 auctions were held), the auction levels were 26.4 per cent higher – and more than double the number of capital city auctions held over the year so far (803).

For the 1,268 results collected so far, the preliminary clearance rate was up at 73.9 per cent, the highest level recorded since the week ended 20 August 2023.

It marked a return to form for the auction clearance rates, which had been dwindling under 60 per cent for the final weeks of 2023.

Canberra led the way for clearance rates, at 80 per cent, with Adelaide (77.6 per cent), Sydney (76.3 per cent), and Melbourne (71.9 per cent), following its highest preliminary clearance rate since early October last year.

Across the largest auction markets, Melbourne hosted 603 auctions (and recorded its highest preliminary clearance rate since early October last year) while Sydney saw 562 homes go under the hammer. Compared to this time last year, both markets saw a sizable lift in auction activity, up 46.0 per cent and 32.5 per cent, respectively.

Across the smaller capitals, Brisbane hosted the busiest auction week, with 203 homes auctioned, followed by Adelaide (159), Canberra (132), and Perth (nine).

In Perth, just one of the three auction results collected so far was positive, while one of the three auctions held in Tasmania was successful.

CoreLogic economist Kaytlin Ezzy commented: “Overall, it looks like auction markets are starting the year on a strong footing. Potentially, the news of low inflation and the possibility of early rate cuts is already boosting sentiment. The next few weeks should provide further guidance on whether this strong result is simply some early-year exuberance or a trend that can persist.”

Auction activity dropped 8% last year

CoreLogic also revealed this week that there were a total of 96,177 home auctions across the combined capitals last year, a -8.0 per cent drop on 2022 and the lowest number of auctions annually in three years.

The 2023 clearance rate was 64.9 per cent, up from 61.2 per cent the year prior.

Melbourne was the busiest auction market in 2023, with 41,302 homes auctioned. However, this was down -7.4 per cent on the previous year.

Sydney recorded both the smallest decline in annual auction activity and the largest improvement in annual clearance rates. There were 36,844 homes auctioned, resulting in an annual clearance rate of 66.9 per cent.

Brisbane was the busiest market of the smaller capitals, with 6,831 homes taken under the hammer in 2023, followed by Adelaide and Canberra with 5,967 and 4,333 homes auctioned, respectively.

Adelaide recorded the highest clearance rate for the second consecutive year, with 73.9 per cent of auctions returning a successful result. Brisbane came in second among the smaller capitals with a clearance rate of 58.7 per cent, followed by Canberra (55.6 per cent).

Perth saw 661 homes auctioned in 2023, with 45.7 per cent returning a successful result while Tasmania saw 24 of the 81 homes taken under the hammer successfully sold at auction.

Ms Ezzy said: “Contrary to the start of auction season this year, the 2023 auction market had a soft start. The first quarter’s capital city auction numbers fell to levels not seen since the September quarter of 2020, when lockdowns and COVID-19 restrictions hampered auction activity, and remained lacklustre through quarter two.

“At the same time, buyer demand started to normalise after values found a floor in January and prospective buyers sought to enter the market before values recovered. This mismatch between supply and demand saw capital city clearance rates continue to trend higher through the first half of 2023, before exceeding the 70 per cent mark for the first time since February 2022 in May, and holding above 70 per cent for four consecutive weeks.”

Despite four rate hikes through the first half of the year, Q3 saw an uplift in auction activity, with capital city auction numbers rising 22.1 per cent compared to the previous quarter – and 14.9 per cent compared to the September quarter of 2022.

This unseasonal lift in auction volumes through winter was partly attributed to “a glut in prospective vendors”, who had previously delayed selling, attempting to ‘beat the rush’ by listing before the spring selling season.

“This upward trend continued into Q4, with auction numbers rising 15.4 per cent quarter on quarter and 19.6 per cent compared to the 2022 spring selling season, which really tested the market,” Ms Ezzy said.

“This rebalancing of auctions supply saw the combined capitals’ clearance rate track lower as negotiating power shifted back in favour of buyers. This saw the success rate fall below the 60 per cent mark over the final two weeks of December.

“Looking at last week’s early results, it’s possible the lower-than-expected inflation reading and prospect of early rate cuts is already boosting sentiment. The next few weeks should provide further guidance on whether this strong result is simply some early year exuberance or a trend that can persist.”

You can find out more about the property market and how it fared in 2023 in the Mortgage Business Uncut podcast. Tune in to this week’s episode, here:

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