Auction clearance rates plunge to 10-week low

Australia's auction market experienced a significant decline this weekend, settling at its lowest preliminary clearance rate in 10 weeks, just ahead of the Reserve Bank's interest rate meeting on Tuesday. The preliminary clearance rate dropped to 50.3%, down from 54.0% last week, which was later revised to 49.1% based on final figures.

The decrease in auction volumes was primarily attributed to the AFL Grand Final, which led to a 22.4% drop in combined capital city auctions compared to the previous week, and a 17.7% decline from the same period last year. Sydney saw the most auctions of the week, with 790 homes sold, a 39% increase from last week but a 32% drop from the same period last year. However, Sydney's preliminary clearance rate fell by 63 basis points, reaching a 8-week low of 53.6%.

Melbourne hosted only 286 auctions this week, a dramatic 69% decrease from the previous week but a 28% increase compared to the Grand Final week last year. Melbourne's preliminary clearance rate plummeted, falling 7.5 percentage points to a 10-week low of 48.8%. Brisbane's clearance rate improved slightly to 42.6%, marking its 18th consecutive week below the 50% mark.

The nation's auction market slump is mirrored in falling dwelling values across the five largest capital cities, with a 1.3% decrease over the past month. Brisbane, Sydney, and Adelaide have been hit hardest, with the combined decline now standing at -5.8%, led by Sydney (-8.3%) and Melbourne (-7.2%). Anticipated interest rate hikes from the Reserve Bank could lead to Australia's largest house price correction in over 40 years.