Canberra’s February auction clearance rate the highest month in 13 years

Canberra’s auction clearance rate in February has recorded its strongest month in over a decade at 78.5 per cent. The same result was reached in July 2007.

Since February 2019, the auction clearance rate jumped 57.6 per cent.

According to Domain data, the latest figures showed a strong auction market rebound from a weak performance in 2018 that flowed onto the first half of 2019.

At the start of 2019, clearance rates were in the 40 per cent range which continued until June. However, the market picked up in July when the clearance rate hit 53.4 per cent and progressed from there. 

The strongest auction clearance rate in 2019 was in November at 66.7 per cent.

Domain senior research analyst Dr Nicola Powell attributed the rise to a number of factors.

“What you find is serious buyers who missed out towards the end of 2019 have come into the new year with the mindset that they are ready to buy,” she said.

“We are also seeing the overall sentiment improve in the Canberra market and that comes off the back of the number of interest-rate cuts that occurred last year.”

Powell added that the certainty over the federal election last July also improved those figures.

“I think that did hang a cloud over Canberra slightly and it always tends to … people would delay their property decisions when there is a federal election,” she said.

“I think the market has started on the right foot this year than the last … and now that we’re heading into autumn followed by winter, which is a more quiet period, it looks like we are setting ourselves up for a better winter and certainly, a better start to spring.”

James Carter of Carter and Co Agents echoed Powell’s statements, noting that the “substantial pick-up in activity from the end of last year has really carried through to the first quarter of 2020”.

“We have a combination of things that are driving that clearance rate, from first-home buyers utilising federal and state government incentives, people upsizing and downsizing to people relocating from other cities to Canberra,” Carter said.

“Canberra is really coming to age with everything that is happening.”

The data also showed that more homes are selling prior to auction. In February 2020, 16.7 per cent of properties sold before auction while 3.3 per cent of vendors opted to withdraw their home from auction.

Powell noted that as competition continued to increase, buyers were likely to place an offer before the auction either to avoid being in that competitive environment or from overpaying. Or vendors might be hesitant that their house would not sell at auction.

“[Perhaps] vendors are still wary of actually achieving a sale at auction so when they get a robust offer prior to auction they are likely to accept it because, in 2019, we were having clearance rates of around 50 per cent, and at the end of 2018, it was 40 per cent,” she said.

“That’s not much of a distant memory for vendors so I think we’re only just starting to see confidence turn around.”

Carter noted that in the past week, he had five scheduled auctions and two of them sold in the week leading up to the auction based on buyers wanting to avoid a potentially competitive bidding process.

“People want certainty, therefore it can be quite daunting for both parties. There’s an even level of interest from buyers and sellers when it comes to auction,” he said.

Across Canberra’s districts, four of the six regions recorded clearance rates within the 80 per cent range including Belconnen, Gungahlin, Inner North and Woden Valley. The Inner South, Tuggeranong, Weston Creek and Molonglo Valley had clearance rates in the 60 to 70 per cent range.

“All the regions performed well and above the 60 per cent benchmark and are now seeing few auctions withdrawn,” Powell added.

“I think the data put Canberra on a good path to price growth and it shows that there is a lot of buyer appetite in the market.”