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Residential auction clearance rates – what do they really mean?

Hurst, Neville and Reed, Richard 2010, Residential auction clearance rates – what do they really mean?, in PRRES 2010 : Proceedings of the Pacific Rim Real Estate Society 16th Annual Conference, Pacific Rim Real Estate Society (PPRES), Wellington, New Zealand, pp. 1-12.

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Title Residential auction clearance rates – what do they really mean?
Author(s) Hurst, Neville
Reed, Richard
Conference name Pacific Rim Real Estate Society. Conference (16th : 2010 : Wellington, New Zealand)
Conference location Wellington, New Zealand
Conference dates 24-27 Jan. 2010
Title of proceedings PRRES 2010 : Proceedings of the Pacific Rim Real Estate Society 16th Annual Conference
Editor(s) [Unknown]
Publication date 2010
Conference series Pacific Rim Real Estate Society Conference
Start page 1
End page 12
Total pages 12
Publisher Pacific Rim Real Estate Society (PPRES)
Place of publication Wellington, New Zealand
Keyword(s) auctions
residential
clearance rate
willing buyer
willing seller
Summary The residential market in Melbourne is often referred to as the ‘auction capital of the world’ with approximately 30-35% of housing transfers undertaken via the auction process, most of which are conducted on the weekend and then reported in the media the following day. The most quoted measurement of auction success is via the clearance rate which simply indicates the proportion of signed contracts of sale within the auction process. At the same time the clearance rate can have a relatively large variance where the residential market can traditionally range from very good (i.e. a high clearance rate) to very poor (i.e. a low clearance rate). The subsequent effect on the market can directly increase or decrease demand, predominantly based only on this single measure of the perceived level of auction clearance rates only.

This paper examines the concept of the auction clearance rates and the heavy reliance on the only one measure of success (i.e. the clearance rates), regardless of other variables. The emphasis is placed on the auction clearance rate as one measure of demand in the housing market but within the context of the definition of market value i.e. willing buyer-willing seller. This is supported by a discussion about other variables including the asking price, the auction process itself, marketing considerations and seasonal adjustments. The findings provide an insight into how to correctly interpret the auction clearance rate in the context of the overall supply-demand interactions. Whilst the auction process is clearly an integral part of the residential transfer process it is essential that the auction clearance rate is used with caution and also in conjunction with other variables.
Language eng
Field of Research 150403 Real Estate and Valuation Services
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category E1 Full written paper - refereed
HERDC collection year 2010
Copyright notice ©2010, PPRES
Persistent URL http://hdl.handle.net/10536/DRO/DU:30031393

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Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.