Weaker home auction markets steady over December with positive prospects for 2016

Capital city auction markets generally produced steady results over December with most recording clearance rates similar to the previous month. December’s relatively stable auction market results were reported despite the typical end of year weakening of market activity due to the seasonal impact of lower buyer activity.
Seasonal effects however contributed to a fall in auction prices over the month reflecting the usual impact of lower numbers of higher priced homes typically offered over December. Although the seasonal price mix of auctions impacted price outcomes over the month, local cyclical factors were also an influence, particularly in the Sydney market that recorded the sharpest fall in prices over the month.

Although average auction numbers were predictably down over December as the market closed down for the holiday break, most capitals recorded results over the month well ahead of December last year reflecting higher confidence levels of sellers. The exception was the Sydney market where auction numbers have fallen sharply over the month with lower year on year comparisons again reflecting local cyclical factors impacting the market.

Sydney

The Sydney auction produced clear signs of stabilising over December following the sharp decline in buyer activity reported since the record results of autumn. Sydney recorded a clearance rate of 53.5 percent over the month which was just below the 53.7 percent recorded over November. The December result however remains well below the 67.4 percent recorded over December last year. Despite producing signs of bottoming out over December, the local auction market ended the year recording its lowest clearance rates since the winter of 2012.
Sydney auction listings fell sharply over December reflecting declining seller’s confidence in the recent sharply weaker market conditions in addition to the usual end of year seasonal effects. Following record offerings over November, average weekend listing fell to 646 down from the previous months 971 average and also well below the 807 averaged over December last year.
Sydney’s auction prices also fell sharply over December – down by 8.3 percent over the month to $1,100,000 from the previous months $1,210,000 and the largest monthly fall in prices of all the capitals. Despite the monthly fall Sydney auction prices remain 15.5 percent higher than the $961,000 recorded over the December last year.

Melbourne

Melbourne’s auction clearance rate fell marginally over December but was nonetheless a solid result offsetting the usual end of year seasonal impacts of lower buyer activity. The December clearance rate of 64.1 percent was just below the November result of 65.8 percent and marginally lower than the 65.9 percent recorded over December last year. The Melbourne market finished the year as clearly the strongest of all the capitals reporting the only clearance rate above 60 percent.

Melbourne recorded a solid clearance rate over December despite another record month of auction listings. Weekend listings averaged 1186 which was a December record well ahead of the 1085 averaged over December last year and followed the all-time monthly record set over November of 1317.

Seasonally lower numbers of higher priced inner suburban listings over December predictably pushed down the Melbourne median auction price over December falling from $800,000 to $766,000. Median auction prices however remained 8 percent higher than the $709,500 recorded over December last year.

Brisbane

The Brisbane auction market rebounded over December supporting other indications of an end of year rise in market activity.  Brisbane recorded a clearance rate of 42.7 percent over the month which was higher than the 39.8 percent recorded over November and also ahead of the 39.9 percent clearance rate of December last year.  Despite the December increase, the Brisbane auction clearance rate remained clearly the lowest of all the capitals.

Brisbane however continues to record high auction listing numbers with an average 134 weekend auctions reported over December.  Although predictably lower than the all-time monthly record of 145 weekend auctions averaged over November, December’s result was higher than the 130 average recorded over December last year.

Brisbane’s median auction price also rebounded sharply over December rising by 4.0 percent to $670,000 compared to $644,000 recorded over November.  Brisbane’s median auction price is now 2.5 percent higher than the $653,750 recorded over December last year.

Adelaide

The Adelaide auction market bounced back over December recording a clearance rate of 57.4 percent compared to November’s 54.9 percent and also higher than the 55.4 percent recorded over December last year.

Record auction volumes continue to test the Adelaide market with December weekend listings averaging 86.  December’s result was well below the all-time monthly listing record of 103 set over November but well ahead of the 73 average weekend listings recorded over December 2014.

Although Adelaide clearance rates bounced back on healthy volumes over December, the median auction price fell, reflecting the usual end of year impact of seasonal impact of lower proportions of higher priced properties in the marketplace.  Adelaide recorded a median auction price of $550,000 which was 6.9 percent below the $591,000 recorded over November and also 6.8 percent below the $590,000 recorded over December last year.

Canberra

Canberra auction clearance rates fell sharply over December following previously strong spring results.  Canberra recorded a clearance rate of 53.4 percent which was well down on the 62.4 percent recorded over November and also sharply lower than the 60.3 percent recorded over December last year.

Auction volumes remain strong however in Canberra with average weekend listings of 68 reported over December which although slightly down on the November average of 76, was well ahead of the 41 average weekend auctions conducted over December last year.

The Canberra median auction price also fell sharply over December falling from $700,000 over November to $647,500 – a monthly drop of 7.5 percent.  Despite this fall Canberra median auction prices remain 5.2 percent higher than the $615,500 recorded over December 2014.

Dr Andrew Wilson is Domain Group Senior Economist