The results also come after both the Australian Bureau of Statistics and RP Data reported low price growth for the December quarter as the impact of higher interest rates takes hold – a trend experts say will be exacerbated by higher stock levels in the next six months.
SQM Research managing director Louis Christopher says while the results are working off a fairly low sample size, they nevertheless show the property market has been weakened by lower consumer sentiment.
"The results are on a low sample size, so we can't read too much into this. But it does seem from the Melbourne result, and to some extent the Sydney result, that what we're seeing is lower than usual."
"However, once again I point out there are several instances of unreported results. A lot of auctions that were on over the weekend were failed campaigns and it's not likely these were reported, so the clearance rates could be much lower."
The results for the capital cities are certainly lower than last year. According to Australian Property Monitors, Sydney recorded a clearance rate of 48.2% from 75 auctions, with total sales of 24.8% – down from last year's rate of 68.5%.
In Melbourne, APM recorded a rate of 61.6% from 82 auctions, while the Real Estate Institute of Victoria recorded 149 auctions with a rate of 60%. However, the REIV points out that "this result indicates the market is not as strong as it was this time last year", when the agency recorded a clearance rate of 85% from 181 auctions.
But while the year may have started with some disappointing stock levels, the REIV says more stock is coming on the market – next week there will be 375 auctions, followed by 715 and then 950 by the end of the month.
Property experts said last year the high amount of stock will keep prices down over the rest of 2011, especially as fewer buyers come on the market due to rising interest rates. And with economists saying those interest rate rises will be kept in the last half of the year, would-be buyers may be scared off for awhile.
APM economist Andrew Wilson says these higher levels of stock will continue to put pressure on auction clearance rates.
"It's to be expected. The expectation is that going forward that buyer confidence will lift, and we'll start to see a rise – although that will be towards the middle of the year."
"In terms of any price growth, that will become evident in the second half of the year, but Melbourne will remain flat."
Christopher says while the stock levels are slightly lower than SQM had predicted, they nevertheless indicate the next few months will be quiet for residential property.
"We've recorded a slight decline in stock levels. We've now had four months of straight declines for stock, but we must be careful looking at those because two of those are holiday periods."
"However, stock levels have elevated substantially. Maybe not as high as we would have thought, but it's a softer market and it's falling."
Christopher says the first auction results of the year confirm his proposition that 2011 will be a quiet one for residential property.
"The ABS has come out with December quarter results, which were a little stronger than expected... but we're seeing flat results in other cities. I think this year we will see a result where it won't be the correction we thought it would be, but it will still remain flat."
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