Auction results are a useful guide for evaluating the property market, however it's important to understanding what the figures represent and how they're calculated. Every weekend, a range of real estate organizations publish auction results, which are rarely the same. There are several reasons for these differences in the results. The auction results discussion threads on AustralianPropertyForum.com cover all the latest results from APM, RPData, and the Real Estate Institutes. The APM results are published first, each Saturday evening. Auction results published on Saturday evenings are based on the samples collected during that day, and may be updated over several publications during the following week, while data collection continues. Normally by the middle of the week, the final auction clearance results (after all data has been collected) may differ slightly from the original figures reported on the Saturday.
It is very important to remember that there are many differences in the various methods used to calculate auction clearance rates by each auction results publisher. Essentially, the auction clearance rate is intended to offer a snapshot of the balance between supply and demand in the auction market, which can be a leading indicator for the property market. To describe auction results in the plainest manner, they provide a way of knowing what percentage of homes listed for sale at auction were actually sold on a given weekend. The organizations who collect auction data may also adopt slightly varying geographic definitions for each city that the auction results relate to, which can cause their results to differ (for example, city center vs CBD).
Several outcomes are possible during an auction. The dwelling may be sold under the hammer, sold prior to auction, sold after auction, passed in, or withdrawn from the auction process. The inclusion of some or all of the five potential auction result outcomes in the clearance rate calculation will obviously affect the initial reported auction result. The most appropriate auction clearance rate numerator calculation includes in the sold figure only those properties that actually sold prior to or during the auction itself. Some organizations, including some real estate bodies, include even properties that sold after auction in the total sold figure. This results in a higher reported auction clearance rate. The most appropriate auction clearance rate denominator calculation includes all reported auctions, even those auctions that were initially listed but then withdrawn prior to the arranged auction date.
Most respected organizations include withdrawn auctions in their calculation in order to prevent bias in the clearance rate resulting from properties being withdrawn due to the expectation they may fail. An industry standard auction clearance rate calculation is: (Homes sold under the hammer + sold prior to auction) divided by (total sold and passed In and withdrawn homes) = Final Auction Result. Macquarie Capital Advisers and APM believe there is a historical correlation between auction results and house price growth.
The Reserve Bank of Australia finds a similar correlation at the national level:
Follow the links below for further information on Auction Results:
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