Property - 15 Nov, 2020

Auction market not heavily impacted by COVID-19

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The auction market experienced an upturn over the September quarter, according to new data from CoreLogic. The property-information group’s Quarterly Auction Review found that in the three months leading to September 2020, both auction volumes and clearance rates saw an increase across capital cities.


During the quarter, combined capitals saw 14,216 homes taken to auction while the clearance rate rose to 59.2%, an increase on the 47.9% seen during the June quarter. The previous quarter, which was severely impacted by the introduction of Coronavirus restrictions on auctions, also saw a lesser 13,783 auctions.

Despite the upturn on the June quarter results, auction market data is weaker than the same period last year. During the September 2019 quarter, combined capitals saw 16,730 homes taken to auction with a 69.9% clearance rate.

Results, however, do appear to be moving in a positive direction. Since the release of the report, weekly auction results have been performing strongly in most capitals.

During the week ending 18 October 2020, CoreLogic reported a total 1,134 auctions, up from the 1,084 homes taken to auction in the week prior.

Of the results collected so far, CoreLogic also reported an increase in the week’s clearance rate, with initial data showing 72.4% auctions were successful. The previous week had reported a preliminary figure of 71.5% which by final collection was later corrected to 66.4%.

Compared to the same period last year, all capitals except Melbourne and Sydney experienced an increased preliminary clearance rate.

While Sydney (75.9%) was down on last year’s clearance rate of 79.2%, Brisbane (54.7%), Adelaide (70.6%), Perth (55.0%) and Canberra (85.7%) all saw an increase, with Canberra reporting a significantly higher result than the 62.7% seen during the same week last year. Melbourne reported a preliminary clearance rate of 65.0%, down on the 73.3% seen last year.

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Despite the lower clearance rate, Melbourne saw a positive pick-up in volumes compared to previous weeks, with 188 homes taken to auction. Although this is substantially less than the 915 auctions held last year, it is far greater than the 59 homes taken to auction in the week prior.

Melbourne, where Coronavirus restrictions have been particularly taxing, has only recently opened back-up to outdoor auctions. From 11.59pm Sunday, 18 October 2020, 10 people, plus the required staff have been allowed onsite.

Ray White Victorian CEO Stephen Dullens told The Australian Financial Review that he believed the recent change in restrictions would help drive more confidence in the Melbourne market.

“It will give more confidence to the average consumer. Everyone in Melbourne loves an auction,” he said.

Even with the partial lifting of restrictions, Mr Dullens still expects online auctions to remain for the time being.

“It will be a bit of a hybrid [between onsite and online] based on what is best for the customer. Some will go onsite and some will remain online,” he said.

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COVID-19 Auction Restrictions by State (updated October 2020)

NSW

  • One visitor permitted per 4 square metres of space.

VIC

  • Real estate auctions (residential and commercial) permitted outdoors with a limit of 10 people, plus the minimum number of people required to conduct the auction.

SA

  • One person per two square metres of space, plus record of attendees kept for contact tracing.

QLD

  • Auctions are permitted but limited to one person per four square metres of space available for staging the auction or one person per two square metres of space if the auction is outdoors or is less than 200 square metres.

TAS

  • One person per square metre with up to 250 period allowed in an undivided indoor space and 1000 people in an undivided outdoors space.

NT

  • Attendance at real-estate auctions permitted. Physical distancing rules of keeping 1.5 metres away from people not in the same household still apply.

ACT

  • All venues can have a capacity of 25 people across venue or if wanting more capacity, one person per four square metres of usable indoor space (maximum 200) or one person per two square metres of usable outdoor space (maximum 200 people). 1.5 metre physical distancing still applies.

WA

  • Real estate auctions permitted so long as adherent to the gatherings limit of one person per 2 square metres.

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Buyers could be back in the market

Buyers could be back in the market, according to new data from Westpac.

The Westpac-Melbourne Institute’s Index of Consumer Sentiment for October recorded a 10.6% jump since last month in its ‘time to buy a dwelling’ consumer sentiment measure, its highest level since September 2019.

“Confidence in the housing market has boomed,” noted the report.

“…The levels of the index in each of these eastern states [NSW, VIC and QLD] are comparable, indicating a high degree of expectation that the Victorian market is set to reopen.”

The report also noted Western Australia and South Australia as key stand outs in respect to confidence in the housing market, also referencing the states’ successes in containing COVID-19.

“The two states that have traditionally lagged the eastern states in the housing market but which are now dealing most successfully with the virus are standouts with respect to confidence around housing,” the report noted.

The report also found an increase in consumer sentiment surrounding house price expectations, suggesting further optimism for the housing market. The report’s measure of house price expectations rose by 31.5% to 117.3.

All states contributed to the rise with NSW (111.7) experiencing a 22.8% lift; Victoria (100.6) by 25.8%; QLD (134.1) by 50%; WA (141) by 46.5%; and SA (112) by 19.6%.

“The national Index is now ‘only’ 17% below its pre-pandemic level and back around the level seen in July last year,” noted the report.

“There is clear optimism in smaller states – where housing has underperformed the major eastern states for several years – although the apparent resilience of the Victorian market is impressive.”

Words by Kathryn Lee

Sources:

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