Almost 800 sellers to test the crumbling auction market on Saturday

Sydney’s crumbling weekend auction market will perhaps get some relief this weekend with lower numbers of homes scheduled to go under the hammer.

On Saturday there will be 782 auctions, lower than last weekend’s 874 but higher than the 753 auctioned over the same weekend last year.

But relief will be temporary with Sydney next weekend set go close to breaking the all-time record number of auctions conducted on a Saturday. Next weekend’s Super Saturday of auctions will feature about 1100 auctions –  just below the local market peak of 1128 recorded on March 28 this year.

The most popular suburbs for auctions this weekend in Sydney are Epping, Blacktown and Condell Park each with 10 followed by Mosman, Leichardt, Ryde and Maroubra each with nine auctions.

The auction market fell sharply last weekend with buyers clearly retreating on the prospect of higher interest rates. 

Sydney recorded its lowest clearance rate of the year last Saturday and the lowest since 2012 at 65.1 per cent. This was down steeply from the 70 per cent recorded the previous weekend and well below the 81.1 per cent reported over the same weekend last year. 

The auction market has tracked back at a rate of knots over the past three months with clearance rates falling by nearly 20 per cent since the 83.1 per cent recorded on July 18.

The shakeout in the Sydney housing market over recent months follows the implementation of various so-called macro-prudential policies by financial regulators. These polices have resulted in higher interest rates for investors and also for Westpac owner-occupiers as announced this month – with other banks surely set to follow with similar rate increases.

Investor activity fell dramatically over July and August in all states according to the latest ABS residential loan data and capital city home auction clearance rates have also generally fallen significantly over the same period.

Clearance rates have plunged in Sydney’s western suburbs although results in higher priced suburban areas closer to the city generally still remain in favour of sellers.

Although clearance rates fell sharply at the weekend trend, auction prices increased again rising to $1,115,000 compared to $1,109,375 the previous weekend and remained 15.8 per cent higher than the $963,250 trend recorded over the same weekend last year. 

The steep fall in clearance rates last weekend will impact into already fragile buyer and seller confidence. The spectre of higher interest rates challenging the housing market however may be offset by a cut in official rates next month. Latest weak ABS jobless data for September surely adds to the case for a cut.

The seasonally adjusted unemployment rate remained steady at 6.2 per cent over the month despite a fall in the number of employed. Only a drop in the participation rate kept the jobless rate steady as discouraged job seekers and retirees departed the workforce. The national unemployment rate has remained intractably above 6 per cent for 16 consecutive months.

Dr Andrew Wilson is Domain Group’s senior economist Twitter @DocAndrewWilson

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