Are auction clearance rates likely to fall if more properties come onto the market?

There’s been a lot of conjecture recently about whether auction clearance rates are an accurate indicator of near-term upward momentum in dwelling prices. Some market watchers are hesitant to call a trend, citing “low” auction volumes. The theory goes that as auction volumes increase, clearance rates might dip lower (as supply outstrips demand).

“We think this view is completely misplaced” says Fabo.

“Auction volumes are typically “low” in the winter months but it’s also a factor that volumes only seem low when compared with a period of very strong established housing turn over between 2013 and 2017”.

History shows auction volumes lag clearance rates, suggesting that we will see a pick-up in auction volumes in the coming months.

History also shows that it’s rarely the case that an increase in auction volumes is commensurate with a dip in house prices.

“Rising dwelling prices are likely to encourage more buyers into the market, as they become more confident that they cannot benefit from waiting for prices to fall further. It’s our sense that will be the case this time around”.

  • Source Macquarie Bank