Are Brisbane auction clearance rates useful?
Brisbane auction clearance rates can be an indicator of property market health. In particular, clearances rates can provide an insight into how the market is faring at a particular time.
What’s the current Brisbane auction clearance rate?
The most recent data from CoreLogic shows that the Brisbane auction clearance rate was 34.2% for the week of 9-15 July 2018. This means that 34.2%, or 55 properties, were sold, while 106 properties (the remaining 65.8%) were not sold. Properties that don’t sell at auction are generally either passed in or withdrawn. Most will end up being sold after auction via private treaty.
How does the Brisbane auction clearance rate compare to the rest of Australia?
The nationwide auction clearance rate for the above period was 52%. However, none of Australia’s capital cities had a strong clearance rate. The Australian Capital Territory and Victoria had the strongest clearance rates at 67.4% and 58% respectively.
When compared to the southern states Brisbane does not sell a lot of properties via auction. For example, in 2017 only around 5% of homes were sold via Brisbane auctions. Comparatively, 32% of Melbourne properties and 21% of Sydney properties were sold via auction in 2017.
However, it’s surprising to note that even in Sydney and Melbourne, auctions aren’t as popular as people think. Private treaty accounts for the bulk of home sales in Brisbane and around Australia.
So what does a clearance rate tell us and why is it useful?
A strong clearance rate is usually defined as being above 75% and indicates strong interest from buyers. This demonstrates a sellers market as their is strong competition among buyers.
A weak clearance rate usually indicates a buyers market as auction interest is low. This can mean sellers may struggle to get the price from buyers that they desire. This generally occurs when the bidding at auction fails to reach the “reserve price”. The “reserve price” is set by the seller and is generally the lowest price they will sell for. If the “reserve price” isn’t reached it’s up to the seller whether they sell the property at auction at the lower price or leave it for another day.
What else should we consider when using Brisbane auction clearance rates
Ensure that when you’re using Brisbane auction clearance rates that you consider the variables. For example, consider the number of auctions held. A high clearance rate from a low number of auctions is not necessarily indicative of a strong market. This is also true for a low clearance rate from high auction numbers – this does not always indicate a declining market.
The number of auctions held varies throughout the year and often depends on a range of factors. These can include interest rates, the number of properties on the market, and the time of year.
Sum up
Auction clearance rates can definitely help us get a feel for property market health as there is often a correlation between high demand and high clearance rates. However, it’s also useful to look at other metrics to get a more comprehensive reflection of market health. Two examples of other metrics to use are –
- “Days on market” – this metric is a useful guide of how long properties are taking to sell. For example, in Brisbane, it currently takes an average of 53 days for a buyer to come along.
- “Average rate of vendor discounting” – this metric shows how, if, and by how much, the vendor had to cut the listed price in order to sell the property.
Tips for sellers thinking about auctioning their Brisbane property
- Auctions tend to suit properties that are harder to place a clear value on. For example, niche or unique properties.
- Auctions tend to be more popular for homes in the premium end of the market.
- Houses are far more frequently sold at auction than units.
- If your property doesn’t differentiate itself from others in the area opting for sale via auction may not be the best choice. We have list of your options when deciding on a method of sale available here – https://www.blocksidge.com.au/selling-information/
