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New research has revealed the nation’s auction activity improved during February despite rising interest rates hindering borrowing capacity.
According to the latest Apollo Auctions’ Auction Report, the national clearance rate improved from 48 per cent during the December and January holiday period to 60.4 per cent in the second month of the year as buyers re-entered the market in force.
Apollo Auctions director Justin Nickerson said the increased activity in the sector is due to increased buyer urgency, which was absent throughout much of 2022’s back end and 2023’s opening months as the Reserve Bank of Australia’s (RBA) interest rate hiking cycle continued to reduce borrowing capacity nationwide while home values failed to fall as dramatically as initially expected.
Last week, Australia’s central bank opted to action a 10th consecutive cash rate increase, taking the figure to 3.60 per cent and maintaining the swiftest and largest increase in interest rates the nation has ever seen.
Meanwhile, CoreLogic’s Home Value Index (HVI) data for February revealed that Australia’s market had begun exhibiting signs of cooling during the opening month of the new year.
Additionally, Mr Nickerson explained that “part of the reason for the uplift was improving results in Sydney, where its auction clearance rate jumped to 62.5 per cent over the past two periods.”
On average, 35 people and 4.6 registered bidders attended auctions in the harbour city during February, with active bidding for the month resting at 37.5 per cent.
The NSW capital was far from the only positively performing Australian auction market, with the director outlining improvement in the Gold Coast, where clearance rates climbed from 44.5 per cent to 64.5 per cent.
The popular regional location attracted just under 42 attendees and 6.1 bidders per auction, the highest of all five reported markets, while active bidding ranked second to nearby Brisbane at 53.88 per cent.
“Buyers have more to choose from than they did 12 months ago, so, it’s fair to say that if sellers are in line with market values, the Gold Coast is looking at even higher clearance rates moving forward,” Mr Nickerson said.
Solid results have also been recorded in Melbourne, where the auction clearance rate during 2023’s second month was 68.4 per cent. Mr Nickerson detailed that “there is clearly an overall more positive mindset with bidders at auction” given the increase in both attendees (29.2) and registered bidders (4.4) attending auctions in the Victorian capital.
“Although the headlines have read as negative, the reality is that buyer volumes at opens are on the rise and levels of competition are improving in Melbourne,” he added.
Mr Nickerson recounted the position of Andy Reid, an Apollo Auctions auctioneer operating in Melbourne, who indicated that “many buyers in Melbourne are now getting to the point where they have waited too long for the market to fall, and each interest rate rise is harming their options just as badly.”
The report detailed Brisbane’s strong start to the new year, which has seen all key metrics increase since the end of 2022. Auctions in the Queensland capital can expect 30 attendees and 3.9 registered bidders on average, while active bidding sits at 58.09 per cent — the highest of all reported markets.
Brisbane’s 66.67 per cent clearance rate ranks it only below Melbourne when it comes to successful auction results.
On Australia’s west coast, low stock levels continue to impact Perth’s auction market, with 922 non-auction sales recorded in the past week eating into crucial auction stock, which already sits 8.3 per cent lower than a year ago.
The Western Australian capital attracts just under 30 average auction attendees and 3.3 registered bidders. Active bidding was at 46.15 per cent during the second month of the year, while clearance rates were the lowest of the surveyed markets (40 per cent).
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