Auction Clearance Rates (ACR) in NSW are remaining this year in the mid sixes, with last Saturday, 17 March, clearance rate at 66%.
But what is a clearance rate and why is it important?
A clearance rate is a key property market indicator. It is generally used to establish if the market favours buyers or sellers. Clearance rates are expressed as a percentage and signify the number of properties sold, or cleared, at auction for the week or month
A low clearance rate, such as 60%, indicates low auction interest and declining house prices, suggesting a buyer’s market.
A high clearance rate, such as 75-80%, is considered a seller’s market as buyer demand is high and available housing stock is low. A high clearance rate indicates the market favours sellers.
Many external factors can influence how many auctions are held as well as the weekend’s clearance rate. These can include sporting events, religious holidays and weather. Traditionally AFL Grand Final weekend has the lowest number of scheduled auctions.
While the auction clearance rate gauges property market sentiment, it is only one of many indicators. It should be used in conjunction with your own market research. If you’re looking to buy or sell, it is always worthwhile attending local auctions and assessing comparable properties.
How does this affect the Southern Highlands market where auctions are not the usual form of selling style?
Whilst in the Highlands most vendors elect to sell under private treaty, the Sydney market usually has a knock on effect to the Southern Highlands. And it makes sense. If vendors are not selling their properties well or at all, they won’t be in a position to purchase their new home in the Highlands. If the market slows in Sydney, the sales slow in the Highlands.
The vendors in the Highlands, if they are in a situation where they have to sell, then need to ‘adjust’ their selling price and lower their expectation of the sale result.
That being said, if the property is unique, interesting, well maintained, in a great area, regardless of ACR in Sydney, the property usually still sells well and sells fast.