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Clearance rates soar for Australian auction market
Homebuyers have been busy bidding across Australia, with new figures showing that the combined capital cities clearance rate reached 80 per cent over the first quarter of 2021.
According to CoreLogic’s Quarterly Auction Market Review, the weekly clearance rate has been at or above 80 per cent just five times since 2008, and four of those were in March 2021.
The property market has quite simply been booming and in the week before Easter it saw the highest auction clearance rate on record (83.1 per cent), which was the busiest week of auctions since late March 2018.
CoreLogic Head of Research Australia Eliza Owen said the strength of auction clearance rates in the March quarter corroborated with a rise in demand in the market more broadly, as dwelling values went up 5.6 per cent.
“This was illustrated through the month of March, when the combined capital cities saw a record high clearance rate of 83.1 per cent, against 3,840 scheduled auctions (the highest volume since March 2018),” she said.
Owen noted that the market has been spurred on by record-low mortgage rates, swiftly improving economic conditions, and a sense of scarcity as total listings across the country remain 26.0 per cent below the five-year average.
Will high clearance rates continue?
Autumn, along with spring, are traditionally times of year that we see auction activity peak, so there is a chance that things will slow down somewhat as the cooler weather sets in.
However, there’s still a high degree of demand in the market due to things like low interest rates and lack of stock, so competition is expected to remain heated for some time even if it does settle down compared to what we saw around Easter.
Notably, we have been seeing even some smaller, less traditional, auction markets experience high clearance rates, which shows how broad the demand for property is across the country.
For property activity to really slow down we would probably need to see either interest rates go up, which the RBA has pretty much ruled out for the next couple of years, or new macro-prudential measures introduced.
There is also a chance that the heightened activity may cause buyer fatigue, which may see some people drop out of the market as they wait to see if things calm down at all in the months ahead.