The Multi-Speed Property Market: Why Some Areas and Property Types Outperform Others
Auction clearance rates are often seen as a key indicator of real estate market strength. With recent figures ranging between 60% and 78%, it’s easy to see why some view the market as strong while others see signs of weakness. But what’s driving this variance?
The answer lies in the fact that we don’t have a single, unified property market or the way in which it is reported. Instead, we are experiencing a two- to three-speed market, where different areas and property types perform at different levels. Some suburbs and property styles are surging ahead, while others struggle to gain traction.
Understanding Auction Clearance Rates
Auction clearance rates reflect the percentage of properties sold at auction versus those that pass in. A high clearance rate (typically above 70%) suggests strong demand, while a lower rate can indicate buyer hesitation or oversupply. However, looking at the overall rate alone can be misleading, as it averages out vastly different conditions across multiple markets.
Why Do Some Areas and Property Types Perform Better?
Several key factors contribute to the differing speeds within the property market:
1. Location and Affordability
High-demand suburbs, particularly those near major cities, employment hubs, and lifestyle amenities, often see stronger auction results.
More affordable areas may attract first-home buyers, benefiting from government incentives and lower borrowing costs.
Luxury markets and high-end suburbs can experience fluctuations depending on economic confidence and interest rates.
2. Property Type Matters
Freestanding houses in sought-after suburbs continue to perform well due to land scarcity.
Apartments, especially in areas with oversupply, may struggle with lower demand and price corrections.
Townhouses and boutique developments often find a middle ground, attracting buyers who want space but at a lower price than detached homes.
3. Interest Rates and Lending Conditions
Interest rate movements impact buyer confidence. When rates are low, borrowing capacity increases, fuelling demand.
Stricter lending conditions can slow down demand, particularly for investors and upgraders.
4. Investor vs. Owner-Occupier Activity
Investor-heavy markets (such as certain high-rise apartment precincts) can be more volatile, especially if rental demand weakens.
Suburbs with high owner-occupier appeal tend to have more stable price growth, as homeowners are less likely to sell quickly in downturns.
5. Supply and Demand Imbalances
Areas with limited housing supply (heritage zones, tightly held suburbs) often see competition drive up prices.
New developments in outer suburbs or high-density apartment zones can lead to an oversupply, softening prices and clearance rates.
The “Melting Pot” Effect
When media reports discuss “the property market,” they often average out all these factors, making it difficult to see the nuances at play. A 70% auction clearance rate might sound healthy, but if high-performing inner-city markets are propping up weaker outer-ring suburbs, the real picture is more complex.
Similarly, within the same city, million-dollar homes might be selling strongly while entry-level apartments face headwinds. It all depends on the underlying demand drivers for each segment.
What This Means for Buyers and Sellers
For buyers, understanding this multi-speed market means there could be opportunities in certain segments where supply is higher than demand. Being strategic about location and property type can make a big difference in long-term value.
For sellers, it’s crucial to analyse local trends rather than just headline figures. If your property type is in high demand, auctions can work in your favour. But if the market in your area is softer, a different sales strategy may be more effective.
Final Thoughts
Rather than looking at the property market as one single entity, it’s important to recognise its layered nature. Some areas and property types are booming, while others are facing challenges. This multi-speed dynamic creates both risks and opportunities—making local market knowledge more valuable than ever.
Whether you’re buying, selling, or investing, understanding where your property sits in the spectrum of market performance is key to making the right decisions.
