Australia Home Auction Clearances Hit 10-Week Low as Rate Hike Looms

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% drop in activity from the previous seven days and 17.7% less than a year earlier, according to data from property researcher Cotality. The weighted average clearance rate was 50.3%, 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% on Tuesday.

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

Sydney held the most auctions, with 790 homes going under the hammer — a 39% increase from the previous week, but down 32% on year. The city’s clearance rate of 53.6% was the lowest in eight weeks, though edging above the winter average of 52.9%.

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