- Preliminary Australian auction clearance rates recovered last week, although a large downward revision to final figures is likely to be seen in the coming days.
- Home prices across Australia’s five mainland state capital cities continued to ease last week, led by continued declines in Sydney and Melbourne.
- The RBA will announce its May interest rate decision on Tuesday. The prospects for a 25 basis point rate cut are seen as a line-ball call.
Australian auction clearance rates recovered last week, although the bounce was likely helped by weak reporting levels from agents.
Despite the improvement, home prices are also continuing to fall.
According to preliminary data from CoreLogic, 58.8% of capital city homes that went under the hammer sold during the week, a small improvement on the 54.6% initial estimate offered seven days earlier.
The bounce was helped by weak reporting levels with CoreLogic receiving results from only 974 of the 1,472 auctions that took place, or 66.2%.
Of those results received, 583 homes sold before, at or after auction while 391 properties failed to clear, including 69 that never made it to market.
The substantial amount of unreported results — some 498 — points to a substantial downward revision to the preliminary estimate when CoreLogic releases final clearance data on Thursday, likely to the low 50% region.
In the prior week, the preliminary estimate of 54.6% was revised down to show a final clearance level of 50.4%. Preliminary reporting rates during that week were substantially firmer at 72.4%.
By individual capital, Sydney, at 66.6%, recorded the highest preliminary estimate across the country last week. However, with just 60.9% of results received, it’s likely the city’s final clearance rate will be revised down as much as 10 percentage points, or potentially more depending on the amount of results that are reported in the days ahead.
Melbourne, at 60.8%, registered the second highest clearance level across the capitals, although reporting rates were also a little softer than usual at 76.8%. A final figure in the mid-50% region appears likely.
Across the remainder of the capitals, sub-50% preliminary clearance rates were reported during the week.
While the preliminary combined capitals clearance rate improved from a week earlier, home prices across Australia’s five mainland capitals continued to slide in early May.
According to CoreLogic’s daily hedonic index, prices fall by 0.2% in average weighted terms, largely reflecting declines of 0.3% in Sydney and 0.2% in Melbourne from seven days earlier.
Elsewhere, median prices in Brisbane eased by a little over 0.1% while those in Adelaide and Perth were essentially unchanged from late April.
On Tuesday, the Reserve Bank of Australia (RBA) will announce its May interest rate decision, with the prospects of a 25 basis point rates cut seen to be a line-ball call among markets and economists.
In the past, rate cuts have generally helped to lift clearance rates and home prices based on the evidence seen in prior cycles.
However, uncertainty ahead of the federal election later this month, along with the impact of tighter lending standards towards household expenses and existing debt levels, may limit any potential boost to market conditions should the RBA choose to ease policy settings further.