Australian home auction clearance rate hits 10-week low as looming rate hike threatens deeper slowdown

AUSTRALIA’s auction clearance rate declined to a 10-week low as a long weekend in Melbourne and the threat of higher borrowing costs weighed on sentiment.

In total, 1,428 homes were taken to auction in the nation’s capital cities last week, a 22.4 per cent drop in activity from the previous seven days and 17.7 per cent less than a year earlier, according to data from property researcher Cotality.

The weighted average clearance rate was 50.3 per cent, the firm’s research director Tim Lawless said.

The decline in activity and clearance rates is a further sign of a slowdown in Australia’s previously red-hot housing market that is driving down prices.

Rising borrowing costs and the government’s removal of tax incentives for residential property investments have sparked the reversal.

The Reserve Bank of Australia is expected to raise its key interest rate to 4.6 per cent on Tuesday (Sep 29).

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In Melbourne, the volume of auctions was almost 70 per cent lower than a week earlier due to the long weekend for the Australian Football League Grand Final, which was a drag on the headline results and helped cut the preliminary clearance rate to 48.8 per cent.

Sydney held the most auctions, with 790 homes going under the hammer – a 39 per cent increase from the previous week, but down 32 per cent on year.

The city’s clearance rate of 53.6 per cent was the lowest in eight weeks, though edging above the winter average of 52.9 per cent. BLOOMBERG