Canberra auction report card: February 2020

Canberra’s auction clearance rates continue to rebound in February with the city recording its most robust month in more than a decade.

The clearance rate has reached its highest level since July 2007. The 78.5 per cent clearance rate was up 18.5 percentage points on December’s result and a staggering 28.7 percentage points higher than last year.

This is a strong rebound from the weak performance in late 2018 and early 2019 when clearance rates were between 40 to 50 per cent.

Auction clearance rates have been trending higher since August.

The reporting rate in February is currently 83 per cent.

Historically, it is not unusual for clearance rates to bounce early in the year, regardless of market conditions. During late spring and early summer auction listings rise, which can weigh on clearance rates, while during late summer and early autumn auction listings are lower, which can help elevate the clearance rate.

That said, the volume of auctions across Canberra rose significantly in February. Clearance rates continued to bounce on higher auction volumes, illustrating an improved buyer appetite. It is likely buyers are being enticed back into the market by low mortgage rates and an easing in serviceability assessment, with many taking advantage of improved affordability. It is important to note that February had five Saturdays, which is typically the busiest day to hold an auction. If auction listings continue to trend higher, it could signal a shift in market sentiment.

Auction prices edge higher

The median auction price for houses across Canberra increased by 4.5 per cent over the year to $812,500 in February. While the median auction price fluctuates month-to-month, the rolling three-month average shows prices are trending higher. Rising auction prices is another indication of stronger market conditions.

More vendors accept offers prior to auction

Homes that sell prior to the scheduled auction provide insight into the sentiment of the market and perhaps price movement. As competition to secure a home increases, buyers are more likely to place a robust offer prior to auction day.  Or vendors can be more open to accepting an offer if they are hesitant the auction isn’t going to be a competitive one.

Canberra has a cohort of sellers who are accepting an offer before the auction day. Based on the decade average this is 9.6 per cent of homes selling prior to auction day. This trend is rising – it now stands at 16.7 per cent.

Fewer sellers are opting to withdrawn homes prior to auction day. In February, 3.3 per cent of vendors withdrawn their home from auction.

This is below the decade average of 4.1 per cent, and significantly below the peak rate at just over one in 10 homes being withdrawn seen in 2019 – another signal of strengthening market conditions.

It is important to note that withdrawn auctions are included within the unsold properties when calculating the clearance rate.

All Canberra districts saw an increase in clearance rates relative to the year prior, with some experiencing a greater bounce than others.

Gungahlin recorded the most substantial monthly clearance rate since records began.

Woden Valley recorded the strongest clearance rate since 2015, while the Inner North posted the highest clearance since 2016.

Belconnen and Weston Creek jumped to the highest clearance rate since 2017, while the inner south and Tuggeranong continue to improve on 2019 clearances.

Post-auction negotiations remain crucial, particularly within a two-week timeframe following an unsuccessful auction, when getting a deal over the line is more likely.

The crucial timeframe is between two to four weeks following the unsuccessful auction when striking a deal is more likely after the failed auction. 

November’s revised clearance rate of 67 per cent, rose to 76 per cent when including the sales secured within a four-week timeframe of the unsuccessful auction.

This pushed passed 80 per cent within four weeks, and by the end of eight weeks had risen to 81 per cent.