Your Guide To Auction Clearance Rates

September 3rd, 2021 - by Brad Gillespie

Sydneysiders have been in lockdown for months now, so how is that impacting the property buying process?

Fact: it’s not. Auction clearance rates are as high as they’ve been in ages, and here’s why.

What are auction clearance rates?

The auction clearance rate is a percentage that’s calculated by adding the total auction properties sold for the week (including all the homes sold before and after auction).

You then divide this by the number of auction results available (including sold, withdrawn and passed in results) and multiply the number by 100 to get the percentage.

It’s used as one of the indicators of how the property market is going. High auction clearance rates indicate a strong and competitive market. And that’s certainly what we’ve been experiencing this year - including during lockdown, when auctions are being held online.

Why are they so high right now?

Auction clearance rates continue to be at an all-time high, thanks to historically low interest rates and a lot of buyers in the market.

Plus, the First Home Loan Deposit Scheme and other government assistance such as stamp duty exemptions and concessions are luring more first home buyers into the market – and when you combine that with less stock on the ground, it’s a pretty safe bet that properties that do go to auction will be snapped up when the hammer falls.

Should you even wait for the auction?

Auctions are being scheduled all over the country with around 600 homes scheduled to go to auction on the last weekend in Sydney alone - despite the lockdown. And many home buyers aren’t content to get gazumped on the big day. In fact, we are finding savvy buyers are jumping in and making deals prior to auction a lot of the time.

We’ve seen this in the inner city and the inner west, where properties we’re selling are selling quickly on, or before, auction day.

Obviously, these auctions are being held online, remotely, adhering to the current restrictions. But the level of enthusiasm only goes to show how competitive the market is, and how comfortable buyers are to transact, even if it’s slightly different from normal auction conditions.

From the city to the ‘burbs

We’re seeing auction clearance rates across the board continuing to soar. In the second last week of winter Sydney recorded a healthy 78.5 percent auction clearance rate, which is higher than this time last year (the rate of clearance then was 66.1 percent). And of the properties sold, 58.7 percent were sold prior to the scheduled auction date.

In the areas we’re focused on, auction clearance rates were 75.8 percent in the city and inner south; and a whopping 81.4 percent in the inner west, which isn’t just a hot market; it’s booming in suburbs like Alexandria, Erskinville and Newtown.

Generally, auction clearance rates over 70 percent are a sign of a strong seller’s market where demand outstrips supply, and it’s certainly still competitive out there.

What next?

While some media reports have suggested there’s a decline in the number of auctions being scheduled, we’re finding everything we do schedule is being sold – so it’s still a great time to sell your home if you’re looking to make a move.

We do expect more stock to hit the market as the Spring selling season commences.

And, if you’re buying, get in touch if you’d like to see what we have available in your area, and what’s selling off-market, as it’s a competitive market and we’d love to help you out if we can!