Improvement of Auction Clearance Rates

The pace of decline has moderated since December last year and there are some tentative signs that credit flows have improved. This improvement has helped signal potential improvements in the housing market.

Another indicator of a subtle improvement in the housing market can be seen in auction clearance rates that are holding in the mid-to-low 50% range, albeit on low volumes relative to a year ago.

The correlation between auction results and housing market conditions is strongest in Melbourne and Sydney where auctions comprise a larger proportion of selling activity.

While a mid-50% clearance rate doesn’t suggest that housing prices are set to bounce back, it does imply closer fit between buyer and seller expectations and the improved auction success rate supports the reduces rate of decline in housing values across Sydney and Melbourne.

Although housing values aren’t falling as rapidly as they were previously, we are still seeing values trending lower across most regions of Australia, and any recovery in dwelling values is likely to be a long-term outlook.