Auction clearances are down sharply from earlier in the year, but that doesn’t mean the market is topping out.
If the market is peaking, the recent shift in the balance of the total number of homes for sale and the proportion of them that have been listed recently turns out to be a better warning sign.
From over 80 per cent in early winter this year, the auction clearance rate has fallen to 72.0 per cent in the five mainland state capitals, according to the latest weekly numbers from CoreLogic RP Data.
That could be used as evidence that the market is on the ropes.
But in the corresponding week a year ago the clearance rate was just 67.8, even lower than it is now.
And prices have risen an average of 10.9 per cent since then, including gains of 16.5 per cent in Sydney and 12.9 per cent in Melbourne.
There’s no guarantee that prices will continue to rise, of course.
They can’t keep rising at this rate forever.
And there are some indications – hints really – that the dominance of demand over supply that’s pushed prices up so smartly is giving way to a more balanced market.
A year ago, the number of homes listed within the preceding month across the eight state and territory capitals was up by 1.2 per cent from a before, but the total number on the market was down by 8.6 per cent.
That showed homes being bought at a faster rate than they were being offered for sale.
The ground has since shifted. Last week, according to the CoreLogic RP Data figures, the number of homes newly listed was down 0.6 per cent from a year before while the total number on the market was up 0.5 per cent. In both cases the size of the movement was close to zero, suggesting supply and demand moving more into balance.
The number of new listings is still relatively high, but buyers – perhaps deterred by the annual price rises averaging 10.9 per cent – are no longer whittling away the stock of homes available for sale.
It’s too early to tell just yet, but if the supply of homes on the market starts to accelerate ahead of growth in new listings, this could in retrospect turn out to be the point where the housing price boom began to top out.