A lot of emphasis is put on clearance rates each week – particularly in Melbourne and Sydney (the two main capitals of Auction sales), however few people really understand what the clearance rate represents. The broad assumption is that “sold at auction” equates to sold “under the hammer” and a high clearance rate means the market is “flying” while low clearance rates depict the opposite. However, it’s not quite so simple.
The clearance figure released on a Saturday afternoon factors in every property that has sold “under the hammer” and also sold via post-auction negotiation. The difference between the number of homes that sell out in the public arena and those that sell via negotiation always tends to fall in favour of the latter. In other words, in our experience, more homes sell via negotiation.
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