House prices: Melbourne, Sydney auction clearance rates edge back from heights

The auction market held strong during April but edged back from its March heights as vendors hoped for knockout prices that buyers were not always willing to pay.

Hopes are high that more owners will decide to sell their homes in the coming months, encouraged by record prices, which would offer more choice for buyers and soothe some of the fear of missing out.

Sydney’s auction clearance rate was a still-elevated 75.3 per cent for April, although this was 6.1 percentage points lower than the almost six-year high of March, Domain figures show.

Melbourne recorded a 69.9 per cent clearance rate for the month, 4.4 percentage points lower than the four-year high it reached in March.

An auction clearance rate of 70 per cent generally correlates with about 10 per cent annual price growth, suggesting the market is very much still rising, although perhaps not quite at the same breakneck pace.

“Conditions for buyers have eased slightly – they still remain competitive but they are better than they were,” Domain senior research analyst Nicola Powell said.

But she warned the results could also be affected by seasonality after Easter, school holidays and Anzac Day.

“There is an element of, have buyers and sellers become distracted in April due to those holidays,” Dr Powell said. “It’s probably a little bit of both.”

The figures back up the latest home value data that showed price growth easing from its 32-year high. Sydney home values rose 2.4 per cent in April, on CoreLogic data – still a jump but less than the extraordinary 3.7 per cent in March – while Melbourne values rose 1.3 per cent in April, down from 2.4 per cent a month earlier.

The median auction price also edged back, with Sydney’s median price for houses sold at auction at $1.65 million, down from $1.755 million a month earlier. Melbourne’s median auction house price was $999,999, down from $1.155 million.

Auctioneer Damien Cooley, of Cooley Auctions, said the Sydney property market was still strong as it was.

“The only reason why you may see an ever-so-slight fall in the clearance rate could be because the vendors are catching up to the buyers,” he said.

“Vendors’ reserve prices have risen – rightly so, given the recent sales that have been taking place – so it’s possible that the slight reduction in clearance rates is as a result of some vendors not meeting the market at auction.”

He said most homes that passed in were selling within a week, often for more than the price at which they passed in.

Some buyers were feeling a fear of missing out, while others were happy to sit on the sidelines in the face of high prices, before becoming disappointed as prices kept rising, he said.

Ray White NSW chief auctioneer Alex Pattaro said although buyers were keen to get into the market, some have seen other properties sell well above reserve and were a little cautious about overpaying.

“There are some sellers that are prepared to meet the market,” he said. “There are some sellers that are holding out for this price, that may or may not be there after auction.”

Mr Pattaro expects more homes to be for sale soon, and with more auctions already scheduled in late May, that would give potential sellers something to buy and encourage them to list their own homes.

In Melbourne, Nelson Alexander director Arch Staver said he was already starting to see a little more for sale.

But he warned that buyers were seeing homes selling for hundreds of thousands of dollars above reserve, and “cynicism tends to creep in a little”.

“[They say] ‘We’re just a bit bruised, we think it’s going to go for too much and we’re not going to participate,’” he said.

This has led to some homes with four interested parties going to auction with only one or two bidders after the others dropped out.

“Hold the line, because you might find yourself in the right place at the right time in any given weekend,” he advised.

On the flip side, some vendors were seeing strong results elsewhere and readjusting their price guides, Mr Staver said.

“It’s not unreasonable for a vendor to have a more ambitious expectation if they’re seeing results continue to go up,” he said. “Some of the vendors are possibly getting a little ahead of themselves.

“If a buyer is tentative and they see a price going up, that cements their position – they’re not going to attend.”