There's more to clearance rates than meets the eye


There's more to clearance rates than meets the eye


By Catherine Cashmore

Tuesday, 02 August 2011

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.

Without attending every auction individually it’s impossible to assess which have sold via post-auction negotiation or reached their reserve with heated competition outside the property – however, it gives a snapshot of the number of homes which have sold on the day as a direct result of the auction’s marketing campaign.

A lower clearance rate can be a combination of many factors, such as high vendor expectation or low buyer activity. It can also be influenced by larger than usual number of listings being auctioned on a particular day resulting in a lower-level buyer competition around those that don’t stand out from the crowd.

Conversely, a lower number of properties auctioned on any weekend can have the reverse effect and produce a higher clearance figure than would be typically expected. It’s important to understand the clearance figure only relates to a small proportion of the market, because most homes are sold via private treaty (the ratio is approximately 70% private sale, 30% auction sale). It also only applies to the metropolitan market, as properties in outer-metro or regional areas generally aren’t marketed for auction.

The other problem with clearance figures is that their accuracy relies on independent agent reporting, which can obviously be manipulated when not audited. Selling agents are required to work in the best interests of their vendor. Therefore they will naturally not disclose prices if asked not to do so. Some are also less likely to report an auction as passed in on the day if lengthy negotiations are still ongoing with buyers who attended the auction (including those who chased up the reserve price post auction in the hope of securing a bargain). Therefore, if the property is sold via post-auction negotiation, there can be a delay in figures being reported.

Sometimes during an auction when there is not much heated competition, the vendor may decide to alter the reserve price, thereby encouraging the agent to pass the property. After all, without this additional negotiation, the vendor will only obtain a figure one bid higher than the under-bidder. The vendor is perfectly entitled to do this.

Obviously the attraction of listing a property for auction is the hope heated competition will push the price over and above expectation. An auction campaign is generally a short four-week process – typically three weeks of marketing, with the auction taking place during the fourth week. It often results in a successful sale because by all intense purposes, it puts pressure on buyers to act within a short time frame. Also – under auction conditions – once the property is sold, the sticker goes up! There is no cooling-off period, no subject to finance – the buyers must do due diligence prior to auction day.

However, when vendors list a property, they also understand that the auction is essentially a three-stage process during which the property can sell before auction, under the hammer, or post auction. Those properties that fail to sell under the hammer or via post-auction negotiation generally sell within two weeks as a direct result of marketing. As any selling agent will tell you, once an auction has failed, there are usually numerous calls from buyers wanting to know the reserve price, assuming that the “failed” auction will result in added pressure for the vendor to sell and reduce price expectation.

So how important is it to monitor the clearance rate? When the RBA assess house price movements it takes into account a broad range of data collected from suppliers such as RP Data-Rismark, APM and the ABS. It also monitors monthly movements and clearance figures. If there is any doubt about the accuracy of reported clearance figures – or whether there should be some differentiation between properties that sell under the hammer, compared with those that sell via negotiation – it’s worth noting the graph on the RBA website, which shows a very close correlation between month –to-month price growth and clearance rates.


The fact that both clearance figures are low and overall turnover is low indicates perfect conditions for those wanting to step in. However, caution prevents most buyers acting against the herd mentality and purchasing while there is apparent doom and gloom flattening expectation and providing better buying conditions.

This is understandable – after all, to the average Australian, the family home is not just a place for shelter, it’s one of the biggest purchases they’ll make in a lifetime, and their future security. For this reason, caution must always rule the heart and buyers cannot afford to enter the market on a whim without plenty of due diligence. However, if you are planning on purchasing, waiting for certainty to set in and the spring market to kick off is not necessarily the best answer.

We should however avoid making broad statements about real estate because the Aussie market is fragmented – despite the 12-month “correction”, some suburbs have continued to outperform overall flat conditions – and some have yet to fall. Each property has its own intrinsic quality, and part of purchasing well is understanding the long term value of what you’re assessing. 

You’d be woefully ignorant if you still live under the conception that purchasing real estate is a simple as paying the price listed on the price tag. There is more than one number involved in any negotiation and assessing a property’s worth takes into account a number of factors.

The agent is only interested in meeting vendor expectation. The buyer is only interested securing their dream property for the lowest price possible. The valuer only cares about market value... and so on. Therefore, if you want to place yourself ahead of the competition, employing a savvy negotiator with plenty of experience to understand these fractions is a step in the right direction.

Catherine Cashmore



Our Services

Buyer Advocacy

Buyer Advocacy

Whether you want us to bid at auction, or provide a comprehensive buyer advocacy service to search, asses and negotiate your ideal investment property or home, we tailor a plan ideally suited to your individual needs.

Read More


We have the expertise to assist with any type of development you are considering - large, or small - from concept to completion.

Read More

What our Clients are Saying

Catherine worked tirelessly in finding me a great property at a good price. She did things that I wouldn't have done (hours and hours of legwork) and more importantly, couldn't have done (organising the purchase before anyone else had even put in an offer). When I was ready to give up, Catherine kept working. I'm certain that I never would have been able to buy the same property within 10k of what we eventually settled at.... David
The expertise you bring are excellent and helped us understand the process and what to do and what not to do. You discussed at the beginning that by using you it will save us money and in our instance and the current environment of Melbourne’s market I believe you saved us $100,000 or enabled us to get into a suburb which going to auction would have gone way over our limit. You worked tirelessly to help us purchase a home.... Karen
“You impressed us from the start, especially compared with the other buyers agencies we approached…” - Raj

More Testimonials

Why use Cashmore & Co?

Our advocates and researchers are international experts on market and real estate cycles. 

With decades of experience working in the Australian real estate market Catherine Cashmore and her associates have lectured widely on the real estate cycle and the economics of investment.

Cashmore & Co use their expertise to assist investors, home buyers and developers.  They simplify the buying process saving buyers thousands in negotiation, as well as preventing costly mistakes.

Cashmore & Co's services and expertise will not only assist you to increase your wealth, but also educate you to become a better investor.

Please click here to see the range of services we offer. 

Or contact us for more information. 

About Catherine

Catherine Cashmore


Herald Sun Pic .jpg

Catherine Cashmore has been working in the Australian real estate market for over 14 years. As a buyer advocate, she has assisted hundreds of Australian home buyers and investors to secure quality real estate for the best possible price. Originally from the UK, and having lived in the US, Catherine is a seasoned traveller who has extensive experience across a range of international real estate markets for those interested in property investment overseas.. 

As President of Australia's oldest economics organisation, Prosper Australia, Catherine is a regular and highly respected media commentator and often called upon to give guest lectures to university students (including RMIT and Sydney University) on how tax policy affects real estate, the design of cities and the economy.

She is editor of Port Philip Publishing’s 'Cycles, Trends, & Forecasts' – a publication that teaches real estate investors about the land cycle and its effects on the economy. She is author of ‘Speculative Vacancies’, the only study in the world that analyses long term vacant housing based on water usage data (Melbourne focused). As such Catherine has an in depth knowledge of the Australian real estate market, few can rival.

You can contact Catherine directly on 0458 143 089 or at



Meet the Team

Please contact us for more information
or call us on +61 458 143 089

Contact us for More Information

Contact Us