Most experts measure the health of the market by auction clearance rates.
Clearance rates are simply the percentage of homes that sell at auction. They are given a great deal of emphasis, as some experts believe they offer a timely insight into the underlying buyer demand at play in the marketplace.
But Angus Raine, Executive Chairman of Raine & Horne, says, “Using auction clearance rates is a problematic market indicator as it doesn’t really reflect the depth of a market or in other words, the number of properties available for sale.”
Also, another factor that is often overlooked is that the majority of properties in Australia still sell by private treaty rather than auction, no matter whether we have a bullish or bearish real estate market. This circumstance will probably surprise many property owners, especially those living in Sydney and Melbourne.
For a vendor, it is essential to understand the types of homes that are more likely to sell by auction, whether that be due to the property type, location, or price point, and this is a conversation that your local Raine & Horne agent will be delighted to have with you.
Days on market provides a better gauge to the health of a market
A truer indication of the health of your local market, according to Angus is "days on market" - the time between a property hitting the market (the listing) and an offer being accepted.
In some capital city markets, for example, Raine & Horne's figures show the days-on-market indicator is running at 7 days per property on average whereas two years ago 45 days was more common. Australia wide, days on market are averaging just 30 days to sell, down from 47 days in the same period of 2020, according to the latest research from CoreLogic.
In markets such as Perth and Darwin, a couple of years ago, properties were available for sale for many many months before they found a buyer. Now days on market is down closer to an average of 20 days with many properties selling much faster than that in Darwin and Perth.
"If the days on market are short, then it's appropriate to label it a seller's market according to Angus. "In contrast, in the dark days of the GFC a decade ago days on market for housing in some regional centres were closer to 350 days and these were definitely markets favouring buyers.”
To find out the days on market in your suburb or town, contact your Raine & Horne agent today.