An analysis of the number of properties sold by auction over the first quarter of 2013 shows a sharp rise in auction sales, coinciding with the stark improvement in clearance rates throughout 2013.
Throughout 2013, there has been a significant improvement in auction clearance rates across the combined capital cities. So far, combined capital city auction clearance rates have been recorded at an average of 63.3% over the year. Throughout 2011 and 2012 clearance rates were recorded at much lower averages of 47.2% and 50.2% respectively.
The increase in auction clearance rates throughout 2013 has coincided with an improvement in home value growth conditions across the capital cities. Over the 2011 and 2012 calendar years, capital city home values fell by -3.8% and -0.4% respectively. Over the first six months of 2013, capital city home values have increased by 3.0%. The performance of the housing market over the past six months represents a turnaround in fortunes from the previous two years although, value growth remain at only moderate levels.
The data suggests that although auctions represent only a small proportion of the overall housing market they are a decent proxy for the current housing market conditions.
Another interesting feature of the market this year has been the surging number of properties taken to auction. Obviously if auctions are proving to be more successful, vendors will be more inclined to sell their homes by this method. On a week-to-week basis, there has been an average of 1,445 auctions so far this year. In 2012 there was an average of 1,334 auctions each week and in 2011 the average was 1,384 auctions. Based on these figures, there are about 100 more capital city auctions each week and the likelihood of selling at auction has increased from around a 50:50 chance to a better than 60:40 chance.
With a rising auction clearance rate it is interesting to look at the proportion of successful auction sales across the combined capital cities, compared to sales by private treaty. Over the first quarter of the year, 14.3% of all sales across the combined capital cities were transacted by auction. The figure highlights that the vast majority of homes are sold by private treaty sales however, auction sales have risen from 10.5% of all sales over the first quarter of 2012.
Across the individual capital cities there have of course been some variances in the proportion of sales. Melbourne and Sydney have the most substantial auction markets of all Australian capital cities. Over the first quarter of 2013, 25.2% of all Melbourne sales were by auction, up from 15.8% over the March quarter of 2012.
The proportion of successful sales by auction across Sydney has also risen over the past year. Over the first quarter of 2012, 13.4% of all sales across the city were auctions. In comparison, 16.1% of all sales over the first quarter of this year were auction sales.
Overall the data highlights that as the auction clearance rate has improved, so too has the proportion of properties going to auction, particularly within Sydney and Melbourne. Although auction volumes have risen, the vast majority of home sales continue to be completed via private treaty. Auction clearance rates are now hovering around levels last seen three years ago. Values over the past year have increased by 3.8% in comparison to annual growth of around 13% last time clearance rates were this high.