Property clearance rates plummet after auction ban

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on March 30, 2020
Property clearance rates plummet after auction ban

Photo by 甜心之枪 Sweetgun on Unsplash

About 40% of scheduled auctions were canned over the weekend as the property market adapts to new social distancing measures.

It was set to be the busiest time of the year for auctions, with over 3,200 homes scheduled to go under the hammer over the weekend according to CoreLogic.

But new social distancing measures introduced by the Morrison Government last week, including a public ban on auctions and open homes, saw 40% of those pulled from the market.

The preliminary auction clearance rate dropped to 51.4% - the lowest level since June 2019.

Last week, the clearance rate was 56.9% across 2,599 auctions.

"The surge in withdrawn auctions was anticipated, considering the rising level of uncertainty from both buyers and sellers, coupled with the shift towards remote auctions which may take some time for the market to adjust to," CoreLogic said.

"Considering the rapid transition to on-line auction formats, some agents reported technical challenges and connectivity issues; no doubt many of these challenges will be resolved with the benefit of more time to prepare.  

"Additionally, the number of auction results collected are lower than usual this week as we seek to confirm the status of scheduled auctions, however, as remaining results are collected we expect the number of withdrawn auctions to rise and the final clearance rate to adjust lower."

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                FLEXIBLE INTEREST AND REPAYMENT TERMS
                • Interest can be paid to other institution
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                Term Deposit (<$1m) - 6 months

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                Rates based on a $50,000 deposit for 6 months. Rates correct as of June 29, 2022. View disclaimer.

                CoreLogic said there had been a surge in the number of properties sold prior to auction, lifting from 22% last week to 36% this week.

                "There are likely to be a range of reasons for more auctions selling prior to the scheduled date, including auctions that were brought forward to beat the ban and vendors motivated to offload their property before lockdown policies potentially escalate."

                Looking forward, CoreLogic expects there will be "substantially fewer auctions than normal" and less property listings as social distancing measures become stricter due to the pandemic.

                "Some vendors will choose to convert their listing to a private treaty method, while others will likely pull their property from the market altogether until confidence and selling conditions improve," CoreLogic said.

                "While the preliminary result this week is not overly surprising given the restrictions were only just announced on Tuesday banning in-room and on-site auctions, once agents have time to adjust it will be interesting to see whether methods such as online or over the phone solutions can become a successful replacement whilst the social restrictions are in place.

                "Overall, we are expecting a substantial drop in new property listings, regardless of the selling method, as buyers and sellers retreat to the sidelines and wait for some certainty to return to their decision making."


                Disclaimers

                The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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                author-avatar
                Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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