Final Walkthroughs Lift Melbourne Auctions

Melbourne’s auction market has defied the city-wide Covid-19 lockdown, returning an increased clearance rate of 73 per cent, albeit to a lower volume of listings.

Much of the national focus was on Melbourne which has been placed under strict stage-four lockdown restrictions as the state battles a surging second wave of coronavirus cases.

There were 298 auctions scheduled in Melbourne this week, down from 357 over the previous week and 500 over the same week last year, CoreLogic said.

Preliminary results showed a total of 178 homes were sold, out of the 244 collected results.

Under the strict new rules aimed at curbing the spread of coronavirus, one-on-one inspections of properties have been banned across Melbourne, with property viewings shifted online.

Prior to the weekend, 18 per cent of Melbourne auctions were withdrawn from the market by nervous sellers, compared with a peak of 65 per cent seen in the second week of April.

Capital city auction statistics

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But not too much should be read into these results, AMP Capital chief economist Shane Oliver said.

“These sales are coming off a lower level of volumes,” Oliver said.

“I tend to think they were transactions likely reflect inspections prior to stage four lockdowns, and moving forward things are likely [going] to slow to a crawl.”

Melbourne’s auction clearance rate for July was 47.3 per cent—up 17.9 percentage points from April’s historical low, but 5.6 percentage points lower than June.

Sydney sellers also showed signs of nervousness as they increasingly settled sales prior to auction rather than risked disappointing buyer bids.

Sydney was host to 642 auctions this week, up from 566 over the previous week and 367 this time last year.

Early results found that of the 483 auction results collected so far, 65.8 per cent have returned a successful result.

Last week, a final clearance rate of 60.7 per cent was recorded, while one year ago, a success rate of 76.2 per cent was achieved across Sydney.

Across the smaller cities, Canberra came in with the highest preliminary clearance rate over the week at 73.2 per cent followed by Adelaide hitting 71.4 per cent.

The national clearance rate of 65.9 per cent was up slightly from last week’s final clearance rate of 65.3 cent, and lower than this time last year at 67.8 percent, according to Corelogic data.

Auction activity to drop despite virtual alternative

In its recently released forecasts, the Reserve Bank of Australia has warned the economic recovery from the Covid-19 pandemic remains “uncertain”, with its latest figures being worse than those predicted three months earlier and house price declines expected.

“The reinstatement of restrictions in Melbourne in early July, including restrictions on in-person auctions and open houses, weighed on new listings and resulted in auction clearance rates declining to 45 per cent in July, to be a bit above the level seen in April,” RBA governor Philip Lowe said.

“The introduction of further restrictions in Melbourne in early August will further reduce activity in the housing market over coming weeks.”

Since the start of the year, Melbourne house prices have lost 1.1 per cent in value, erasing the gains the city recorded before the pandemic hit.

By contrast, Sydney managed to hold on to a slim 2.2 per cent gain.

“Following a strong bounce-back, auction clearance rates in Sydney have remained relatively stable in the recent period, at a bit above 60 per cent,” Lowe said.

Nationally, house prices fell by a lower 0.6 per cent during the month, offset by the smaller declines and even a slight rise in values in some capitals.