Source: ELIZABETH REDMAN, SENIOR NEWS PRODUCER MAR 26, 2020, Domain
Auction clearance rates have slipped in Sydney and Melbourne over the final days before the method of sale was temporarily banned to help combat the coronavirus crisis, new figures show.
Looming economic uncertainty meant some vendors had to tweak their price expectations as buyers were unwilling to pay the soaring premiums seen in recent months, agents report.
Even so, clearance rates remain in positive territory, after some home sellers rushed to bring property sales forward and beat the Wednesday night deadline after which no public auctions will be allowed. Buyers have also been keen to snap up a home in case any future lockdown prompts a market hiatus.
Sydney's final clearance rate on Saturday, March 21, was 66.7 per cent, on Domain data.
This compares with 68.3 per cent the previous week, and 74.6 per cent the week before. The clearance rate for the NSW capital held above 70 per cent throughout February.
Melbourne recorded a 61.2 per cent final clearance rate on Saturday, down from 64.9 per cent the previous week, and 70.7 per cent a fortnight before, excluding the Labor Day long weekend.
“We have seen that clearance rate fall over the last few weeks, but given the circumstances that unravelled, particularly over the last couple of weeks, the clearance rate has held up really well off the back of the health crisis,” Domain senior research analyst Nicola Powell said.
“Buyers are still transacting, but I definitely think we are seeing some weakness in the market.”
In a sign of the uncertain times, vendors have become more willing to accept prior offers or to pull their auction altogether.
In Sydney, 38.4 per cent of auctions sold prior, the highest since the quiet January period, while 16.7 per cent of auctions were withdrawn, the most since last June when the market was weaker.
Melbourne vendors withdrew 6.9 per cent of auctions, the most since the summer holidays, and 19.1 per cent sold prior, the highest since June.
“We are seeing buyers want to secure their properties before auction,” Dr Powell said. “Vendors, given the uncertain economic times we're faced with now, they're accepting those offers.”
With agents scrambling to adapt to the new social-distancing measures, which escalated quickly from a ban on handshakes to a ban on public auctions, some sales were moved forward.
Some 61 auctions were scheduled in Sydney for Tuesday, a prescient move given Prime Minister Scott Morrison announced Tuesday night that auctions could not continue after the following day.
Of these, 27 results have so far been reported. Eleven sold prior, 15 were withdrawn and one sold under the hammer.
Melbourne had 34 auctions scheduled on Tuesday, with 23 results reported so far. Twelve sold under the hammer, two sold prior and nine were withdrawn.
Results also varied widely across the two largest cities.
In Sydney, there was healthy competition in the sought after lower north shore, upper north shore and northern beaches, which all recorded a clearance rate of at least 75 per cent on Saturday.
The western suburbs, by contrast, came in at just 48.1 per cent.
Melbourne buyers behaved differently, chasing the relatively affordable north-west region, which posted a 67.5 per cent clearance rate, while the north-east was close behind at 66.1 per cent.
The Agency chief executive Matt Lahood said post-auction sales were being negotiated even for properties that passed in under the hammer on the weekend, but noted some conservatism around price.
“Even though there was 60-plus per cent cleared on the weekend, post-auction sales are still going together,” Mr Lahood said.
“Sydney and Melbourne have been pushing above 75 per cent clearance [earlier this year] so most owners would be thinking they're going to clear and probably get slightly above expectations. That had stopped, coming into this last Saturday.
“Buyers had started being a bit more conservative; that's to be expected.”
In any shock, such as the GFC or a terror attack, a new market forms afterwards as owners reconsider if they have to sell and buyers prefer to keep some cash in reserve, he said.
“The big difference with this market and the GFC is money was really hard to get with the GFC.”
Jellis Craig director Andrew McCann said despite the rapid change in how houses were sold, the clearance rate drop had been relatively modest.
He compared it to the depths of the market downturn a year or more ago when the clearance rate was about 45 to 50 per cent on much lower volumes of homes for sale.
“With more volumes and higher success, you'd have to class that as a strong selling market,” he said, adding homes that passed in were selling after.
But he also noticed more negotiating in price last weekend than in recent weeks, calling it a “marginal change”.
“There was probably a little bit of negotiation to be had, and I think that's a swing factor in any market: vendors' expectations versus what buyers are prepared to pay.”
This weekend coming was set to be a super Saturday, with 1393 homes listed for auction in Melbourne and 1046 in Sydney, but now likely to sell by phone, through online bidding platforms or to be switched to expressions-of-interest campaigns.
The changes to auction results have separated out serious buyers and onlookers, Dr Powell said.
“The market is uncertain for both buyers and vendors,” she said.
“I still think there are buyers in the market. We are still seeing properties transact.
“But, what I think we will see now is those serious buyers will still be making the transactions but those that can perhaps pause their decision-making when it comes to property will do so at the moment.”