Property Buyers at Risk from Misleading Auction Clearance Rates

Property buyers are at risk from misleading auction clearance rates, according to strategist Mark Bayley of AquAsia.

Real estate agents report only a fraction of auction results, which are biased and could lead buyers into the property market without having accurate facts. Bayley blames the RBA, media and data providers for making people overexcited about misleading clearance figures, according to The Financial Review.

Data for the previous six months show that the clearance rate reported cannot be relied on as the basic trend. However, Cameron Kusher, RP Data’s senior analyst, said that people are interested in weekly clearance rates because they’re a good indication of the current state of the property market – particularly for Sydney and Melbourne as they have more auction results than other cities.

The reported results are collected on a Saturday. Later on in the week, more figures are calculated to produce the final weekly clearance rate. Enzo Raimondo, REIV’s chief executive, said that the reason why all auction results aren’t reported is because some agents might be busy dealing with prospective buyers on Saturdays. Furthermore, some results are withdrawn or postponed by midweek.

For Sydney, the current clearance rate as reported by APM is 83.7% and RP Data’s is 78.6%. According to Bayley’s calculations, the real auction clearance rate is 49.9%.