Canberra's auction clearance rates have plummeted 30 percentage points compared to the same period last year, according to new data, leaving property experts split on whether the market is cooling or experiencing a temporary correction.
Sharp Decline in Clearance Rates
Data from CoreLogic shows that the clearance rate for the first four weeks of spring 2024 averaged 52.3%, down from 82.1% in spring 2023. This marks the lowest spring clearance rate since 2019. The number of auctions held also dropped by 15% year-on-year, with 312 auctions in the period compared to 367 last year.
CoreLogic's head of research, Eliza Owen, said the decline was significant but not unexpected given the rapid rise in interest rates. "The market is adjusting to higher borrowing costs, and we're seeing buyers become more cautious," she said. "However, clearance rates are still above the lows seen in 2019."
Expert Opinions Diverge
Despite the data, opinions among local agents and economists are mixed. Some believe the drop signals a sustained downturn, while others argue it is a seasonal blip.
"This is a clear sign that the market is turning," said independent economist Dr. Andrew Wilson. "With interest rates still high and more properties coming to market, we can expect further softening." Wilson pointed to the increasing number of days on market, which has risen from an average of 25 days in spring 2023 to 38 days this year.
Conversely, Ray White Canberra auctioneer James Murray said the figures were skewed by a higher proportion of lower-quality properties. "We're still seeing strong competition for well-presented homes in sought-after suburbs," he said. "The clearance rate for properties under $1 million is actually higher than last year."
Impact on Sellers and Buyers
The decline has implications for both sellers and buyers. Sellers may need to adjust their price expectations, while buyers could find more negotiating power. However, experts caution against reading too much into short-term data.
"One month doesn't make a trend," said Ms. Owen. "We need to see how the spring selling season unfolds. If clearance rates remain below 60% for several months, that would be a more concerning sign."
The Reserve Bank of Australia's next interest rate decision in November will be closely watched by the property market. Many economists expect rates to remain on hold, but further hikes are not ruled out.
