Auction market off to early start as listings spike

Australia’s auction market got off to a busier start than usual, with more sellers hitting the market over the traditionally quieter summer holiday period in a bid to get ahead of the competition before an increase in listings gives buyers more choice.

Hundreds of homes had been scheduled for auction over the past two weeks, and more than 1150 more are set to go under the hammer this week – up 30 per cent year-on-year, CoreLogic figures show.

CoreLogic research director Tim Lawless said it was a carry-over of the momentum from last year, when a post-lockdown surge in homes hitting the market led to record auction volumes in the December quarter.

While that pent-up supply had probably worked its way through, more homeowners were looking to take advantage of still generally strong selling conditions, he said.

“Also at the back of people’s minds is the growing outlook that the market will probably be softer this year and that, potentially, selling conditions could become more challenging as more stock comes onto the market … and [we see] a rebalance away from sellers back towards buyers,” he said.

There were 448 homes taken to auction across the capital cities over the week to January 23, CoreLogic figures show, up from 244 for the same time last year. A preliminary clearance rate of 68.6 per cent was collected from 310 results, though Mr Lawless noted this was likely to fall once remaining results were collected.

Melbourne recorded a preliminary clearance rate of 64 per cent, Sydney a rate of 58.3 per cent, and Brisbane a rate of 76.1 per cent, though all off low volumes. Adelaide had the highest rate at 78 per cent.

“We’re probably seeing a bit of scene setting here, even though the numbers are still pretty thin … but the clearance rate wasn’t far removed from where it was late last year,” Mr Lawless said.

The higher volume of auctions seen in January, and increase in homes being listed – up about 6 per cent year-on-year across the capitals, but still below the five-year average – meant there would likely also be a stronger than usual rise in seller activity in the weeks to come, Mr Lawless said. However, he did not expect to see a repeat of the record auction volumes seen late last year.

Ray White NSW chief auctioneer Alex Pattaro said auction volumes were certainly up compared to previous years, with some sellers deciding to hit the market in early January – either to take advantage of lower stock levels and less competition, or because they simply needed to sell sooner rather than later.

The bulk of sellers, however, had decided to wait until after Australia Day and the school holidays to launch their sales campaign, Mr Pattaro said, with February 19 shaping up to be the first big auction day of the year. A small handful of sellers had pushed campaigns back due to the ongoing surge in coronavirus cases, he added, but most were going ahead.

Mr Pattaro said it was too early to tell whether auction volumes would reach the heights seen late last year, which eased buyer competition and put downward pressure on the clearance rate. However, early signs pointed to strong buyer inquiry, with open for inspections drawing more people than they were late last year, when buyer fatigue saw many house hunters put their property search on hold.

The auction market and broader property market would be more balanced in 2022, he said, noting clearance rates above 80 and 90 per cent seen in 2021 had been abnormal. That balance should encourage more homeowners to sell, as they would be able to sell and buy in the same market without fear of prices running away from them between transactions.

Barry Plant executive director Mike McCarthy also expected a more balanced clearance rate and market for Melbourne, saying strong listing volumes at the end of 2021 had carried into the new year.

The few auctions the real estate agency had run for the year to date, mostly on the Mornington Peninsula, had gone well, but the bulk of their sellers across Melbourne and regional Victoria would start coming onto the market in the coming weeks. Mr McCarthy had seen more activity early last year, he added, due to pent-up sales from the city’s extended lockdown in 2020.

Mr McCarthy said buyer demand was still strong but not at the same levels seen post-lockdowns, noting sellers had been a bit spoilt by clearance rates of more than 80 per cent, which were likely left behind in 2021.

While there would still be some runaway results, they would be fewer, and vendors and buyers needed to keep expectations up to date rather than relying on results from a year ago, he warned, adding the proportion of sellers choosing to go to auction instead of private treaty could also fall in the months ahead as buyer competition eased.