Sydney auction floodgates are open, market runs out of steam

The floodgates are opening in Sydney’s auction market, with the highest number of auctions for an October Saturday expected to take place.            

Almost 1000 homes are scheduled for auction on Saturday with final numbers set to exceed this, yet Sydney’s once-strongest ever sellers’ market is fast morphing more in favour of buyers in some regions.

Buyers with the prospect of gaining the upper hand are those purchasing in the north west, west and south west, where clearance rates have tracked below 60 per cent in recent weeks.

When this heads below 50 per cent, it’s a buyer’s market.

Sellers saw no relief last weekend, as the auction market recorded its second consecutive clearance rate below 70 per cent at 69.9 per cent.

The Sydney auction market has undergone a remarkable transformation since autumn with clearance rates falling from record near-90 per cent levels reported in May.

Auction numbers were predictably lower last Saturday due to the distractions of the Labour Day long weekend holiday with just 373 auctions conducted. This weekend will be well ahead of the 747 listed over the same weekend last year.

The weekend auction market continues to run out of steam with the likelihood of lower results throughout the remainder of spring – particularly as unprecedented volumes of auctions will continue to burden the market.

The auction hotspots this weekend are Baulkham Hills and Mosman, each with 14, followed by Leichardt 12, Castle Hill, Turramurra and St Ives each with 11 and Auburn and Marrickville with 10 auctions each scheduled this weekend.

Record-high winter and spring auction listings have been a contributing factor to moderating clearance rates, providing sellers with more competition and buyers with more choice. But the booming autumn also produced record listing numbers with peak levels above those recorded this spring so far.

Trend auction prices fell again at the weekend influenced by the relative low number of auctions. The latest Saturday trend price of $1,104,375 was below the previous weekend’s result of $1,116,875 but still 12.6 per cent above the trend recorded over the same weekend last year. 

Low interest rates have been a key driver of previously strong market activity, however the rate cut energy of autumn has clearly dissipated.

The Reserve Bank met for its regular monthly meeting this week and decided as expected to leave official interest rates on hold over October.

Although rates have been on hold for five consecutive months, further indications of deterioration in local and international economic activity and continued volatility in sharemarkets may bring a Melbourne Cup Day rate cut into play next month.

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

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