Clearance rate set to drop as buyers avoid auctions, open homes

Article by: Nila Sweeney,  Reporter

Source: Australian Financial Review

March 13, 2020

Auction clearance rates are poised to fall as more buyers delay their purchase and shun public gatherings for fear of contracting the fast-spreading coronavirus.

 

Property search activity – a leading indicator of the health of the property market – has already fallen during the past two weeks.

 

The number of people at open homes fell in all capital cities over the past two weeks compared to early February. Stephen McKenzie

 

“All search activity on realestate.com.au has slowed over the past week,” said Nerida Conisbee, chief economist with the property listing site.

Queensland recorded the biggest drop in searches, while Victoria has had the lowest decline in activity.

 

“There is no doubt that the coronavirus is impacting buyer confidence, despite the interest rate cut last week,” said Ms Conisbee.

 

“We are likely to see clearance rates decline this weekend. But at the same time, listings may be impacted as people hold off selling until there is greater certainty around the spread of the virus and ultimately what happens to the economy.”

 

Property portal Domain said the number of people attending open homes had also dropped.

The data gleaned from its Homepass app that agents use to check people in at open homes showed that the number had fallen in all capital cities over the past two weeks compared to early February.

 

“This drop could just be a sign of a slightly softer market, but it could potentially be a sign that coronavirus fears are putting people off attending open for inspections,” said Trent Wiltshire, economist at Domain Group.

 

Sydney-based auctioneer Clarence White said he was aware of a few auctions that might not go ahead this weekend around Sydney’s eastern and inner-west suburbs.

 

“I’ve seen a little bit more auction withdrawals during the last couple of weeks,” he said.

 

“There are indications leading up to this weekend that I might see a few withdrawals because buyers’ interest were not looking that strong at the moment.”

 

Adrian Kelly, REIA president said it was more likely the markets would be affected by reduced consumer sentiment than the actual virus itself.

 

“I am already hearing of many stories whereby potential vendors are deciding not to sell at this time, preferring to wait until things normalise,” he said.

 

Buyer’s agent Anna Porter said new inquiries from buyers had been a little quieter than usual during the past two weeks.

 

“We suspect it is because of the economic uncertainty. People are hearing whispers that there could be quarantines, work will be stopped and there will be job losses over the next six-12 months,” she said.

 

“When people have uncertainty around job security, they do tend to shy away from buying property. So until this passes I believe we can expect a more subdued rate of buyer inquiry, especially since it is such an unprecedented event.”