When talking about the Property Market one of the key performance indicators discussed are auction clearance rates… these numbers are talked about endlessly when we discuss the climate of the property market, but often people are unaware what these figures actually mean to everyday property owners and buyers. For instance, does the percentage of clearance rates indicate that its a buyers market or a sellers? Are auctions likely to drive prices up or down? The answers to these questions are key in knowing how the property market can work in your favour depending on your circumstance.
According to Domain, clearance rates can be described as a “barometer for buyer sentiment” where the percentage of clearance indicates who the market is favouring – the buyer or the seller. Anything above 70% is perceived to be a sellers market where demand is high and supply is low allowing auctions to drive the prices up. In contrast, back in 2012 it was more of a buyer’s market with an average clearance rate of 56% giving buyers more power to negotiate prices.
It is no surprise currently Melbourne is a seller’s market. In 2016 the clearance rate held strong at an average of 76%, with 2017 shaping up to be just as strong with the previous 4 weeks showing consecutively rising rates. The average for February alone was 78.5% with Armadale, Balaclava, East Melbourne and Flemington boasting a 100% clearance rate.
Domain Chief Economist Andrew Wilson is confident the strong start to 2017 is an indicator of the overall success the year will bring. Wilson says “This is the strongest early season market we’ve ever had…. The fact we’re getting more sellers and the clearance rates are even rising rather than just holding shows there’s still plenty of underlying demand for property in Melbourne”.
For more information on buying or selling property in Melbourne, contact Solid Investment Property on (03)9690 2666