The auction clearance rate is the most commonly quoted indicator on the performance of the real estate market. Simplistically, if the clearance is high, the market is doing okay. If the clearance rate is low, say below 50%, the market is in trouble.
Prior to looking at the accuracy of the auction clearance rate as a market guide, it’s worth looking at how and why the clearance rate has become the indicator of choice, over all others.
Getting reliable and accurate data on the real estate market is near impossible. Unlike the stock market which is dynamic and real time in the manner it reflects price, the reporting of results in real estate is cumbersome and slow. There is no centralised point or organization where all sales results are collated, to offer accurate and insightful perspective on how the market is performing, at that point in time.
Sales results are only publicly available upon settlement of the sale. The actual exchange of contracts could have happened 3 or 4 months prior to the result being reported. The only way to have total clarity in the real estate market is if it were compulsory for every transaction to be re [Read more…]