Australia's preliminary clearance rates drops to lowest level since July 2020: CoreLogic

Australia’s preliminary auction clearance rate has dropped to its lowest level since late July 2020, with Melbourne’s ban on inspections weighing down auction results, CoreLogic figures reveal.

About six in 10 properties (63.3 per cent) sold in the past week across the capital cities, down from 72.3 per cent the week before – but it is not widespread.

There is a clear divergence between Sydney, where you can still inspect property, and Melbourne, where you cannot, despite both states being in lockdown.

Sydney recorded an 81.7 per cent clearance rate compared to Melbourne’s 48.6 per cent, where almost half of the homes were withdrawn from auction.

CoreLogic research director Tim Lawless said the ability to inspect property during lockdown was the biggest driver in buyers making the commitment to purchase a home.

“That’s the only real difference in the market. They’re both moving through lockdowns,” Mr Lawless said.

“When you consider you’re spending hundreds of thousands dollars, if not millions, some people want some ability to inspect the property.

“Buying a home is one of the biggest financial decisions you can make.”

Melbourne’s auction market had returned to last year’s tough conditions, said Barry Plant executive director Mike McCarthy, with buyers and sellers forced to shelve plans unless absolutely necessary.

“There’s no doubt it will distort the market further and create hardship for buyers and sellers,” Mr Plant said. “No one is transacting for fun at the moment. They’re doing it because they need to.”

Those vendors who were still selling were getting “good results”, he said, with strong demand and a diminished number of homes on the market.

He said if the ban on property inspections continued it would erode future supply, with photography for new listings also banned, placing greater pressure on the property market.

“[The ban on inspections is] the missing factor, I have no doubt … Sydney has taken a sensible approach to that.”

Meanwhile, properties in Sydney continued to sell at a high rate, with a whopping 61.5 per cent of homes clearing prior to auction, the CoreLogic data showed.

BresicWhitney’s head of sales and chief auctioneer Thomas McGlynn said while the ability to inspect property meant people were still able to buy and sell, more auctions were brought forward by two weeks to get a deal done as soon as possible.

“It means that a conclusion is being arrived at a lot quicker than what it would take generally in a normal marketplace,” Mr McGlynn said.

“People are growing impatient and the owners don’t want to wait for four weeks to see a result and they don’t want to do inspections every week.

“The leading reason why our clearance rate has been able to remain relatively stable is because we can still show property.”

He said that Sydney’s auction culture was also more comfortable with selling prior, unlike Melbourne.

The investor market was likely to have been harder hit in Sydney, Mr McGlynn said, as investment properties were more likely to be tenanted, making it difficult to access even for one-on-one inspections.

“The investor market had been building strongly prior to lockdown and obviously it’s become a lot harder to see properties if you’re an investor.”