Key takeaways:
Clearance rates fell: Cotality’s combined-capitals auction clearance rate declined from 49.1% to 46%.
Holiday schedules are affecting volumes: Around 1,252 auctions are expected this week, with public holidays reducing activity in several capitals.
Conditions differ between markets: Auctions remain less common in Perth, which may make the process less familiar for some buyers.
Check your finance before bidding: Pre-approval is conditional and does not guarantee final loan approval.
Cotality’s final auction results for the week ending 27 September show that 46% of collected results across the combined capitals were successful. That was down from 49.1% the previous week and 68.7% a year earlier.
The results also arrive as buyers assess what the Reserve Bank of Australia’s (RBA) latest cash rate increase may mean for their borrowing position. The RBA increased the cash rate by 0.25 percentage points to 4.60% on 29 September. Whether and when this affects an individual buyer will depend on factors including their lender, loan application and financial circumstances.
For buyers, the headline clearance rate is only one part of the picture. A lower rate may create more scope for negotiation in some cases, but it does not automatically make a property easier or more affordable to buy. Competition may still vary between suburbs, price ranges and individual properties.
What happened at auctions this week?
Cotality recorded 1,403 auctions across the combined capitals, down 23.8% from 1,841 the previous week. Much of that decline reflected Melbourne’s AFL Grand Final weekend, according to Cotality, rather than a uniform reduction in activity across every city.
Capital city | Final clearance rate | Auctions held |
|---|---|---|
Canberra | 51.9% | 81 |
Sydney | 48.4% | 774 |
Melbourne | 47.9% | 284 |
Perth | 38.1%* | 21 |
Adelaide | 37.6% | 101 |
Brisbane | 32.9% | 140 |
Combined capitals | 46% | 1,403 |
*Perth’s result was based on a small number of auctions and should be treated cautiously. Tasmania recorded two auctions, one of which sold. Cotality does not report a clearance rate where fewer than 10 results are collected.
What to watch this weekend
Cotality expects 1,252 homes to go to auction across the combined capitals in the week ending 4 October, 10.8% fewer than the previous week.
The national total is also lower than the corresponding long weekend last year, with public holidays in New South Wales, Queensland, South Australia and the ACT affecting auction schedules.
Sydney has 353 auctions scheduled, down from 774 last week. Melbourne is expected to host 644, up from 284 over the AFL Grand Final weekend.
The sharp week-to-week changes in Sydney and Melbourne partly reflect the holiday calendar, so buyers may wish to focus on local comparable sales and interest in comparable sales for the individual property rather than auction volumes alone.
Why auction conditions differ between markets
The national clearance rate combines markets where properties may be sold in different ways. Based on what Aussie Victoria Park Broker Le-On Lim is seeing amont clients and agents in the area he services, private treaty remains more common than auctions.
“The WA market traditionally is still not an auction market. The majority of sales still tend to be private treaty,” Le-On said.
“However, I’m finding more real estate agents are using auctions to create a bit more urgency and competition,” he said.
You might also be interested in: Buying at auction vs private treaty
For buyers with limited auction experience, the process may feel unfamiliar. Le-On recently worked with clients who had missed out at several auctions and were uncertain about how to approach bidding.
“They weren’t really sure what to do and were probably going to the auction to put an offer on something a bit beyond what they could do because of the emotion,” he said.
The clients later worked with an Aussie Buyer’s Agent, while Le-On assisted with their finance.
“They knew when to pull back, they knew certain strategies and they knew what the agents were trying to do with the auction process,” he said.
The clients eventually purchased a property at auction.
While the outcome will not be the same for every buyer, Le-On said the experience showed why understanding the process and setting a financial limit may be particularly important in a less familiar auction market.
“I think it’s really important that anyone in the WA market who goes to an auction has the right support and makes sure their finance is in order,” he added.
Auction and cooling-off rules differ between states and territories.
Are changing finance conditions affecting buyer confidence?
AMP chief economist Shane Oliver said distressed sales currently appeared limited, although properties were taking longer to sell.
“At this point in time, distress sales look to be low,” he said. “That’s evident in the listing figures and the auction data.”
Oliver said listings were below their level a year earlier, which had partly supported Melbourne’s clearance rate after its mid-year lows. However, he cautioned that higher borrowing costs could increase pressure for some households.
“The bottom line is that the more rates go up, the greater the risk of distress selling,” he said.
This remains a risk rather than a prediction, and conditions may differ between borrowers and markets.
What are buyers considering before bidding?
Aussie Buyer’s Agent Sunny Katyal said some of the buyers he is currently working with are reconsidering which property features matter most.
“Buyers are shifting away from the ‘turnkey perfect’ mindset,” he said.
“Rather than waiting for a home that ticks every cosmetic box, they are compromising on non-structural elements, accepting older carpets or taking on properties needing minor cosmetic refreshes.
“Buyers are compromising on a fourth bedroom or reducing land size to stay within preferred postcodes rather than being pushed further out geographically."
The trade-offs that may be appropriate will depend on the buyer’s budget, priorities and circumstances.
You might also be interested in: Budget, location or the home: What should first-home buyers compromise on?
Sunny said buyers should also understand their finance position and any conditions attached to their pre-approval before bidding.
“Clear borrowing capacity and explicit lender conditions,” he said. “A pre-approval on paper is not an unconditional green light.”
Pre-approval can provide an indication of what a lender may be prepared to lend, but final approval may remain subject to lender criteria, the property valuation and the buyer’s circumstances.
An Aussie Broker can help a buyer understand their borrowing position, the conditions attached to a pre-approval and how different lenders may assess their circumstances.
The buyer takeaway
A 46.0% clearance rate shows that fewer than half of Cotality’s collected auction results were successful. It does not show whether a particular home represents value or how much competition an individual buyer may face.
This weekend’s lower scheduled auction volume partly reflects public holidays rather than a uniform change in property conditions. Competition may still differ between individual properties, even when the broader clearance rate is below 50%.
An Aussie Broker can help buyers understand their borrowing power, compare lender requirements and assess what may be achievable based on their circumstances.