I have been tracking the REIV auction statistics for the entire year and it has been interesting noting trends in the figures that are reported.
Of course the most obvious trend has been that of the clearance rate which have fallen from highs over 85% early in the year to 65%, they then stagnated through the middle of the year and have since continued their descent from late September. Where do they settle? I suspect with the large number of auctions over the next few weeks that we could see low 50's reported from the REIV, which would likely mean under 50% from other reporting bodies such as APM & RPData who also release auction statistics using more conservative methodologies.
Another interesting statistic to note has been the increase in auctions being reported as "no result". Essentially this means that at the time of print for the data, real estate agents were yet to report to the REIV the results of these auctions. As a percentage of auctions held on the weekend this number being left unreported is on the increase. Having hovered around the 7-9% throughout early and middle parts of the year it has now blown out to a regular 12-14% or higher. In my opinion this potentially points to Real Estate agents holding back from reporting those not sold to artificially boost the clearance rate.
Given that the past 2 weekends (6th/13th November) have both had their clearance rates revised lower by 2% (both revised down to 59% from 61%) following the official releases, it's not too hard to imagine that we'll see another revision (lower) with this weeks clearance rate of 59% & high % of those with no result.
We've already seen a couple of big weekends for Melbourne and it's set to continue with over 1000 auctions scheduled for the next 3 weekends (this weekend being the first of 4 mentioned in the article below).
Market pendulum starts swinging for buyersA RECORD 4385 auctions will be held over the next four weeks, giving buyers the best opportunity to snap up a bargain in two years.
The Real Estate Institute of Victoria said this was buyers' best opportunity since the global financial crisis to snap up property for less than it was worth.
For the first time, there will be four consecutive weekends with more than 1000 auctions scheduled, which could force sellers to accept less than they hoped for.
Melbourne and Sydney have really been the last two cities standing in the way of the RPData index showing drops in property prices across the nation, we've been in limbo as most cities stagnate or drop with Sydney and Melbourne standing firm and holding the numbers up. Will this continue? I doubt it. I think it will be obvious by the end of the year that prices are falling across the nation.
Auction clearance rates have been known to correlate strongly with price growth as indicated by the following chart produced by the RBA.
The chart indicates that when we get a national clearance rate (weighted) of lower than 50% then we see price falls. Given the high number of auctions held in Melbourne it tends to heavily influence the national clearance rate, so if Melbourne clearance rates fall further, then so will the national figure.
The Saturday Advertiser had an article about housing, "Housing glut a buyer's market" the title reads...on page 23. Of course if we were seeing a tight property market and price increases we would have housing as front page news, given the downturn they have to tuck it half way through and hope no one notices.
They provided a few statistics in the article mentioning that their lift out RE section contained 2649 open inspections, which is 200 more than last week and almost 1000 more than the same time last year. That's around a 60% increase in listings from the same time last year!
The number of properties listed for sale continues to rise across the nation. I noted in an earlier blog on housing that REFind showed an increase from 284,000 homes for sale at the start of August to around 311,000 in early November. Today that number stands at around 323,000, a 14% increase from August and 4% increase over the last few weeks alone. With the seasonally slow property period leading up to Christmas and in the 2 months following it will be interesting to see how high the stock on market reaches, will we see a rush of sellers try to get their properties on the market now in advance of the slow down?
Note: Table and graph showing REIV data purposefully exclude weekends that don't reflect a normal weekend (long weekends, AFL grand final weekends, election weekend are all excluded from the data series).