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Auction rates signal new twist in property market downturn

The property market could be close to turning around. Image: Getty

The number of Australian properties heading to auction more than doubled last week off the back of a phenomenon only seen every three years: a federal election.

More than 2,000 (2,041) homes went to auction across Australia’s combined capitals, up from 930 homes the week before.

According to CoreLogic analysts, the sharp increase was the result of the federal election, which suppressed auction figures the week before.

The percentage of homes clearing auction (62.6 per cent) was significantly higher than this week last year (56.2 per cent), although CoreLogic analysts predict that figure will fall as more auction results come in.

“In Melbourne, a preliminary auction clearance rate of 62.9 per cent was recorded across 971 auctions this week, while last week there were 432 auctions returning a final clearance rate of 60.7 per cent,” CoreLogic said.

“There were 697 auctions held in Sydney this week returning a preliminary clearance rate of 69.9 per cent. In comparison, there were just 276 auctions held over the previous week returning a final clearance rate of 56.5 per cent.

“There is a chance that this week’s final clearance rate may just be able to hold above 60 per cent after Sydney has seen the final clearance rate sit above 55 per cent for the last 3 weeks.”

Property values go up

Property values in some cities, including Sydney, Melbourne and Adelaide, also recorded a weekly increase in property values. Sydney values were up 0.3 per cent, while Melbourne and Adelaide both increased by 0.1 per cent.

The lead-up to the federal election had negative gearing and capital gains tax changes top of mind for homeowners, who were warned by an incumbent Coalition government that negative gearing changes could dent their home values amid an already-softening market.

While the property market has tilted towards a buyers’ market, an anticipated June interest rate cut from the Reserve Bank of Australia could also take the edge off the softening property market, restoring more confidence to sellers.

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