Clearance rates reach 8-month high

Property analytics provider CoreLogic has released preliminary clearance rates from the auctions held last week (ending 11 February), revealing that the strong start to the 2024 auction market has continued.

After the second-busiest start to auction season on record, strong demand has pushed up the weekly clearance rate.

According to CoreLogic, there was a 76.2 per cent clearance rate last week across the combined capital cities, where 1,551 homes went to auction (911 results collected so far).

This marks the highest preliminary clearance rate since early June 2023 and is up on the 73.9 per cent recorded the prior week (ending 4 February).

With 618 homes hitting the market, Melbourne recorded the most auctions of the capital cities. Of the 377 results collected so far, the Victorian capital had a preliminary clearance rate of 73.1 per cent.

Sydney followed close behind with 615 homes going to auction. Of the 386 results collected so far, the Sydney market achieved its highest preliminary clearance rate since October 2021, at 80.4 per cent.

The Queensland capital had 147 auctions scheduled to take place last week, and of the 64 results collected so far, 71.1 per cent were successful.

However, it was Adelaide that had the highest preliminary clearance rate of all capital cities with a strong auction market, with 86.2 per cent out of the 50 auctions clearing.

Canberra, Perth, and Tasmania had fewer than 30 results collected so far.

Noting the figures, Tim Lawless, CoreLogic’s research director, stated that the volume of auctions and high clearance rates over the past fortnight suggests that 2024 has begun with a stronger relationship between buyer and seller pricing expectations.

Unlike last year, when the auction market started with reduced clearance rates amid rapidly rising interest rates, the start to the 2024 market has given way to a “newfound strength in auction markets,” Mr Lawless said.

The strength in recent preliminary clearance rates, and the auction market overall, comes alongside a rise in vendor confidence, which may ease supply pressures.

Confidence from real estate agents for 2024 has also been on the rise as clearance rates have remained strong over the previous weeks.

CoreLogic economist Kaytlin Ezzy has previously suggested that the higher sentiment may be reflective of the expectation that mortgage interest rate cuts may be coming later this year, and as inflation moderates.

Ms Ezzy said: “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.”

Mr Lawless echoed Ms Ezzy’s sentiments, commenting: “Stronger auction outcomes could be reflective of a boost in sentiment as expectations of an earlier-than-expected interest rate cut become more widespread.

“The newfound strength in auction markets is a radical turnaround from the December results last year, where the preliminary capital city clearance rate fell to the mid-60 per cent range while final clearance rates dropped to the mid-50 per cent level.

“The early part of the year can show some seasonality, however, with both the volume of auctions and the clearance rate coming in high over the past two weeks, it looks like the year has started with a much better fit between buyer and seller pricing expectations.”

Find out more about how the auction market is faring and the top themes impacting the mortgage market in the Mortgage Business Uncut podcast, here.

[Related: Australia sees second-busiest start to auction season on record]