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What can you learn from auction clearance rates?

By Andrew Bell

There’s more than one way to sell a home, and more than one way to predict what’s coming in the housing market. Auction clearance rates are one indicator that can show you how the market is moving and can help you determine the best time to buy or sell a residential property.

While it’s not an exact science – nothing in the housing market is – you can learn quite a bit from auction clearance rates. Keep an eye on these rates and you can understand the housing market on a more granular level, allowing you to buy and sell at a time that’s right for you.

Understanding auction clearance rates

Each month, hundreds of homes are sold by auction across Australia. The auction clearance rate is the percentage of the homes that are successfully sold at auction during that month. It is calculated by dividing the total number of properties sold at auction by the total number of residential properties listed at auction. These percentages can be broken down further by calculating the auction clearance rate by city, state and territory.

There’s more than one way to sell a home.

Auction clearance rates indicate housing market trends

Auction clearance rates are important to understanding the housing market as a whole. Spikes in the auction clearance rate can indicate a stronger selling market where more people are willing to buy. The opposite is true, too – a lower clearance rate reflects slowing buyer demand.

High clearance rates reflect not just an increase in buyer demand, but also that there may be an under-supply of homes available for sale, a growing property market and that it’s a desirable market for sellers.

In addition to reflecting weak demand for homes, a low clearance rate indicates an over-supply of homes available for sale, a slowing property market and a buyers’ market that may offer lower prices and the ability to shop around.

Rates point to overall economic performance

Economists and investors often turn to the housing market to gain insight into the Australian economy at large. As auction clearance rates can indicate how the housing market is moving, you can also learn more about the country’s economic performance, which may affect everything from your investments and choosing the best time to buy or sell a home
Low clearance rates point to low demand, which may be due to a weakening job market as fewer people can afford to buy and move. High clearance rates, on the other hand, can point to higher consumer confidence as individuals feel prepared to take on such large expenses as buying a home.

High clearance rates, on the other hand, can point to higher consumer confidence.

Auction clearance rates don’t say everything

As you explore the housing market and learn more about auction clearance rates, keep in mind that these rates aren’t the be-all and end-all in predicting housing trends. It’s impossible to know exactly how a market may move, but you should consider it one of many data points to mind as you prepare to buy or sell.

Be sure to look at other factors, as well, such as pricing trends, particularly in your local market. Gold Coast properties are different than those in Sydney, which are different than those in Perth.

The best way to learn about the housing market is to speak with professionals who can help you decide the best time to successfully buy and sell a Gold Coast property with as little stress as possible.

Real estate professionals at Ray White Surfers Paradise can help you get on your way. Contact us today to learn more.

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