What Is Happening With Sydney Auction Clearance Rates?

Media in the last couple of weeks have reported a rise, then fall in auction clearance rates – but what does it mean? The Australian carried the story last week “Auction Clearance rates under the hammer” remarking that Sydney auction clearance rates were down 8% from the previous week.

So is this something that investors need to be aware of, or concerned about?

Auction clearance rates demonstrate how many houses sell at auction over a given period (eg a weekend) and are an indicator of property market dynamics. Clearance rates are influenced by supply (how many houses are for sale at auction) and demand (how many bidders are ready to buy at auction). They give a general indication of the heat in the property market.

Lower rates might occur due to an imbalance on either side of the scale (low demand relative to high supply), and general trends probably do carry some weight. Consistently low or high clearance rates probably need to be accounted for in an investing strategy, but weekly variations may be of less importance.

Whether clearance rates will effect your strategy will depend on your property investing plan. If rates reflect a cooling property market, then perhaps flips and growth property represent a greater risk – but add-value deals might still be very appropriate and “good value” buys from motivated vendors may well be worth considering.

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