By Caitlin Fono, Research Analyst, CoreLogic Australia

With this being the last week before Easter, we are expecting to see the busiest auction week since late May 2022 when 3,226 auctions were held. There are currently 2,876 homes scheduled for auction across the combined capital cities this week, up 24.9% on last week (2,303), although -10.4% lower than this time last year (3,209). Although auction volumes have increased week-on-week, they are significantly lower than the week prior to Easter in 2022 (4,035), and the quietest week prior to Easter since 2019 (2,276).

There are 1,257 auctions scheduled in Melbourne, the busiest auction week since mid-June last year (1,266). While up 10.6% on last week (1,137), the number of homes scheduled for auction this week is -16.3% lower than the same week last year (1,501). In comparison, the week prior to Easter in 2022 saw 1,795 homes taken to auction across the city.

In Sydney, auction volumes are set to exceed 1,000 for the first time this year with 1,130 homes scheduled to go under the hammer. This marks the busiest auction week since the week prior to Easter in 2022 (1,490). While up 43.0% on last week (790), the number of homes set for auction this week is similar to this time last year (1,136).

Across the smaller capital cities, Adelaide, Brisbane, and Canberra are set to see auction volumes rise over the week. There are 177 auctions currently scheduled in Brisbane, up 33.1% on last week (133), followed closely by Adelaide (174), up 32.8% on last week (131). Canberra is set to host 119 auctions this week, up 32.2% from last week when 90 auctions were held across the city. Perth is set to see slightly fewer homes taken to auction over the week (16, down from 18), as is Tasmania, where three auctions are currently scheduled, down from four last week.

Last week’s final clearance rate was 66.7%, up 2.5 percentage points from the previous week (64.2%). This time last year, a clearance rate of 66.8% was recorded across the combined capitals.

In addition to the weekly Auction Preview, CoreLogic’s Research Director Tim Lawless has provided the following comments on the volumes, clearance rates, and why auctions provide such a timely test of the market.

“With finalised auction clearance rates holding around the decade average over recent weeks across the major auction markets, it will be a timely test of the market’s depth to see if clearance rates can hold at this level or even rise further on such high volume,” Mr. Lawless said.

“Auction results provide one of the most timely measures of the fit between buyer and seller pricing expectations, with a clear positive correlation between the trend in clearance rates and housing values.

Clearance rates have shown a substantial improvement from late last year when the combined capital cities were consistently returning a clearance rate around the mid-to-low 50% range.  In comparison, the capital city weighted average clearance rate has held above 60% since late January, with the last weekend of March coming in at 66.7%.

The lift in clearance rates has been accompanied by a clear lift in housing values.  Based on CoreLogic’s daily HVI, the past four weeks have seen Sydney home values increase by 1.4%, Melbourne and Perth values are up half a percent and Brisbane by one-tenth of a percent.

No doubt the persistently low number of listings coming to market has a role to play in higher clearance rates and the recent upwards pressure on housing values.  At the combined capital city level, new listings added to the market were 9.1% below the five-year average over the past four weeks and total advertised listings are holding around 20% below the average for this time of the year.

It’s likely the combination of surging net overseas migration and record-low vacancy rates are contributing to the renewed strength in housing market conditions.  Extremely tight rental conditions may be incentivising renters to consider a home purchase if they can afford it, although the cost of mortgage repayments has increased substantially more than rental costs.  For permanent or long-term migrants to Australia, it’s reasonable to assume many recent arrivals will be skipping the rental phase and moving more rapidly into a purchase decision amid such low vacancy rates.

Although the outlook for housing markets is looking increasingly buoyant, we remain cautious in calling a bottom in the cycle.  There is still some catch up in the interest rates cycle before households see the full impact of the higher rate and its likely economic conditions will slow through the rest of the year and labour markets will loosen.”