Property prices: What auction clearance rates tell you about the market

Already a subscriber?In property-obsessed Australia, knowing when to buy or sell a home is often the difference between getting an average or great result at auction, with clearance rates one key indicator of the market’s overall health.

Buyers get more transparency as to where other bidders are at during an auction, says Astrid Joarder.Auctions are most popular as a sale method for more valuable property in Sydney and Melbourne that’s likely to attract strong interest and multiple bidders, while outside the major capital cities apartments and houses are more commonly sold by private treaty.An auction clearance rate above 70 per cent indicates a sellers market whereas a rate below 60 per cent suggests a buyers market .

“But a sustained period of lower clearance rates generally means it’s a buyers’ market where you may get sharper prices.”After the Reserve Bank of Australia embarked on the steepest cycle of interest rates rises in a generation from May 2022, preliminary national clearance rates slumped to aThe rate was the weakest since April 2020 at the peak of the pandemic panic that smashed confidence around asset valuations and the economic outlook.

According to Christopher, the main drivers of property prices are interest rates, employment levels, wages growth, population growth and overall economic growth. Clearance rates are a symptom of the relative strength of the market and these drivers. According to Collier, factors like the time of year or public holidays may shift clearance rates over the short term, while the volume of properties going to auction over any one weekend is also an important influence on clearance rates.

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