Lockdowns Putting Downward Pressure on Melbourne Clearance Rates
Published 6:06 am 25 Aug 2021
The latest lockdowns have brought Melbourne’s auction clearance rates back to 2020 levels.
New data from CoreLogic has found that only 63.3 percent of capital city auctions held this week were successful – the lowest clearance rate seen since the height of the pandemic in July last year.
The rate is more than a 10 percent decrease from just one week ago, which saw 72.3 percent of auctions succeed.
2,106 homes were expected to head to auction, which was then revised down to 1,977. So far, 1,525 results have been collected to provide the 63.3 percent clearance rate.
Though not all capital cities experienced the same downtick in clearance rates, with Adelaide seeing a strong 87.1% preliminary clearance rate, and Sydney seeing an 81.7% preliminary clearance rate – despite the ongoing lockdowns.
Ultimately, the low clearance rates are due to Melbourne, who saw a 48.6% preliminary clearance rate – just barely above the rate seen at the same time last year (45%).
In-person auctions and inspections have been banned amid Melbourne lockdowns, which is evidently taking a toll on clearance rates. Meanwhile, Sydneysiders are still able to attend inspections despite the ongoing lockdowns that were recently extended until September 30th.
“Clearly we are seeing a remarkably different outcome in auction results across Australia’s two largest auction markets which can be explained by the fact that properties can still be physically inspected in Sydney (although a private inspection is limited to one person at a time), but not in Melbourne. The divergence in the auction clearance rate tells the story about how important it is for prospective buyers to be able to physically inspect a property in order to make such a high commitment decision as buying a home,” said the CoreLogic report.
There were a total of 1,179 auctions scheduled this week in Melbourne, which was revised down to 1,067. Then, of the 792 results that have been collected, 49.9 percent of auctions were withdrawn, while 69.4 percent were sold prior to auction. This reflects the highest ‘sold prior’ rate since the last week of September 2020.
Source: Weekly Clearance Rate, Combined Capital Cities (CoreLogic)
All of Victoria is now in lockdown, which is currently scheduled to end on the 2nd of September at midnight. Until Melbourne lockdown restrictions subside, the auction clearance rates are likely to remain at a reduced level.
Moreover, if both Victoria and New South Wales continue to stay in lockdowns, the ensuing economic downturn could trigger Australia’s second recession since the pandemic began.
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