In comparison to the average number of weekly auctions over the same period last year, there are currently 22% fewer auctions taking place each week.
Auction clearance rates provide a very good lead indicator as to the performance of the housing market and the sentiment of buyers. It is, however, important to note that in 2011 auctions only accounted for 20.4% of all capital city house and unit sales. This is also reflective of the results over recent years and highlights that auctions are something of a niche market.
Of course, not every property is going to be a candidate to be taken to auction. If the subject property is fairly standard there is often little benefit in taking it to auction, whereas many believe that unique and prestige homes should be taken to auction to get the best price. The auction market is certainly more reflective of the prestige housing market, considering that 20.4% of all capital city homes sell at auction, however, these sales account for a much larger 27.5% of the total value of capital city home sales. These trends are replicated across each capital city except for Hobart.
Across individual capital cities there is a varying degree of popularity surrounding auctions. In Melbourne, auctions are the most popular of all capital cities, accounting for 31.6% of all sales, followed by Sydney (23.6%) and Canberra (17.2%). In every other capital city, market auction sales account for less than 15% of all capital city home sales. The results show that, overwhelmingly, most vendors prefer to sell by private treaty and, presumably, most purchasers prefer to buy via this method as well.
Overall, it is important to recognise that auctions comprise only around one-fifth of the overall capital city housing market and tend to reflect the performance of higher priced homes. Nonetheless, auction clearance rates are a good, timely indicator of market sentiment and it is encouraging that they have been stronger in 2012 than they were over the latter part of 2011.
This article first appeared on RP Data.
Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.
