Melbourne and Sydney auctions see skyrocketing prices and high clearance rates
The Domain Auction Report Cards for Sydney and Melbourne shows Australia's two biggest cities hit their highest clearance rates since 2015 and 2017 respectively, while the number of auctions scheduled in Sydney during March was the highest ever recorded.
A clearance rate is a key property market indicator, expressed as a percentage of the number of properties sold at auction: Sydney's clearance rate in March was 82.3% of properties while Melbourne's was 74.8%.
These numbers follow other recent data from CoreLogic, which revealed Sydney and Melbourne's median property values rose by 6.7% and 4.9% in just three months to lead national property prices to the steepest monthly spike in 32 years.
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In Sydney, March's clearance rate was 28.3 percentage points higher compared to March 2020 (when the clearance rate was only 54%), and in Melbourne the increase was 24.6 percentage points higher (up from 50.1% in March 2020).
According to Domain's senior research analyst Dr Nicola Powell, Sydney has now seen its longest run of strong clearance rates since 2015, when rates held above 80% for 20 Saturdays in a row.
"Clearance rates have been gaining momentum since May 2020, post-lockdown, and this demand has continued to follow through to March 2021," Dr Powell said of Sydney's results.
"With auction clearance rates holding firm above 80% on high auction numbers, the Sydney property market is expected to continue to remain competitive throughout late autumn and could provide unseasonable winter conditions. Buyer appetite remains even when tested on higher volumes of scheduled auctions.
"For buyers, the combination of low mortgage rates, high household saving rates and relaxed serviceability assessment has allowed buyers to take advantage of higher price expectations."
Related: Sydney, Hobart 'unaffordable' for almost half of first home buyers.
Auction conditions were strongest for houses in Sydney, with 84.2% sold under the hammer last month compared to 77.5% of units, Dr Powell said.
In Melbourne, 76.6% of houses at auction were sold compared to 69.3% of units.
"The lift in market sentiment has started to encourage sellers to market, with auction listings rising," she said.
| Melbourne Auction Results: March 2021 | Clearance Rate |
| Houses | 76.6% |
| Units | 69.3% |
| Combined | 74.8% |
Data via Domain.
Auction sale prices soar in Sydney and Melbourne
With demand at auctions sky-high - Domain reported a 7% increase in the number of sellers accepting offers before the auction was even held - prices too are surging as a result.
The median auction price for Sydney jumped 16.9% over 12 months to $1.755 million; For Melbourne houses, prices jumped 17.9% over the year to $1.15 million.
Both of these are well above the median values overall reported by CoreLogic ($928,028 for Sydney and $736,620 for Melbourne).
Sydney and Melbourne units also broke new ground, breaching the $1 million and $700,000 marks when sold at auction for the first time respectively.
"Not all homes are sold at auction, and others available for private sale may not command such high asking prices. But homes are often taken to auction when a real estate agent expects competition from at least two potential buyers, suggesting homes sold at auction are often highly sought-after," Dr Powell wrote.
Related: Top 10 most affordable regional property markets.
Other capitals see record prices too
It wasn't just Sydney and Melbourne sellers seeing dollar signs at auctions in March.
Property analytics group Archistar found all capital cities recorded sharp increases in the median price of houses sold at auction over the year ending March 2021.
Brisbane has the highest growth over the year, up by a whopping 29.3%, while Canberra (12.2%) and Adelaide (10.9%) also posted positive results.
Source: Archistar
The median sale prices are a stark contrast to median dwelling values as reported by CoreLogic, with the median value of Brisbane homes ($535,618) less than half the median auction price ($1,099,750).
Yet Archistar chief economist Dr Andrew Wilson believes auction prices have not yet peaked.
"Weekend home auction markets as expected have continued to produce boom-time results over March with prices and clearance rates now clearly at record levels," Dr Wilson said.
"Although April is typically a quieter month for auction activity with buyers and sellers distracted by holidays, results will nonetheless likely continue to track at record levels with home prices set to go higher and higher."