Melbourne’s auction clearance rate was 47.3 per cent in July. This is 17.9 percentage points above April’s historical low, however it has slipped 5.6 percentage points lower than June and 17.3 percentage points below July 2019.
July had the weakest monthly result since April, highlighting the fact that the second lockdown has had a similar outcome to April, which was impacted by the first COVID-19-related lockdown.
Rebounding auction volumes now likely to remain weak
Just over 1850 homes were expected to be auctioned over July, up a staggering 161 per cent from May and 16 per cent from June, and 23.5 per cent higher than July 2019.
Vendor confidence had begun to return after the first lockdown’s lull. Buyer appetite would have been tested by this rebound but Melbourne’s second lockdown has hampered this.
From July 9, a ban on public real estate auctions was introduced as part of social distancing measures to slow the spread of the secondary wave of COVID-19 infections.
Many of the homes scheduled to go under the hammer in July would have been listed prior to this announcement and vendors had the choice of selling by private treaty, expressions of interest or trying a virtual auction.
The number of auctions that were withdrawn spiked in the weeks immediately following the ban.
In July 35.9 per cent of the scheduled auctions were withdrawn, significantly higher than the 7.2 per cent decade average, pulling down the clearance rate.
All auctions that are withdrawn, irrespective whether they remain for sale by another method, are technically classed as an “auction withdrawn”. A withdrawn auction is included within the unsold properties when calculating the clearance rate, and therefore has a negative impact on the end result.
While the withdrawal rate is high, fewer vendors opted to pull homes from auction compared to the first lockdown, it is well below the unprecedented response when 64 per cent of vendors opted to withdraw their auctions in April.
Buyers found prior to auction
The volume of auctions withdrawn over the first Saturday in July was more in line with the historical performance. Following the on-site auction ban, the subsequent Saturdays in July saw the withdrawn rate jump, although the number of homes sold prior to auction also rose during this time.
In July, many homes on an auction campaign found buyers prior to the hammer falling, with 22.6 per cent transacted before the scheduled auction date – well above the 13.4 per cent decade average.
Over the coming weekends, it is expected withdrawn rates will become minimal while auction volumes remain low. That said, buyers and sellers have become much more familiar selling virtually and it is anticipated that virtual auction numbers will surpass those seen throughout lockdown one.
