Auction Clearance rates are DODGY

Most ppl agree that the Auction clearance rate is one of, if not, the best leading indicator for property prices.

However we all know the issues with the statistic. Namely that it relies on the self-reporting from Real Estate Agents. It;s not like they have an interest in fudging the stats right?

Considering how much Auctions are used in hot markets, and drop away when mkt cools, like in Sydney now.

Perhaps "Nature of Sale", like Auction stats vs Property Sales would be a more meaningful indicator as this actually tracks what the REA's are doing, rather than what they are saying . . .

Anyone seen this data / or have a view about the clearance rate? Is it as dodgy as it seems?

 

Yeah, it has been discussed, I see many places I have attended or been watching not reported , but overall it would still be a reasonable indicator, I would just say it is optimistic.

Over a period of time, it should reflect any trend/s though.

 

I can't believe the real estate industry is dodgy.

I hope the tooth fairy leaves me some money.

 

You have teeth ?

I thought you would have self pulled them all by now to soup up the common*hore, or the datto ?

 

On PC? Never!

 

Did/Do you assist Biz ?

 

If I don't pull it who's gonna?

 

Reminds me of the stay off thread thread.

 

I can't say that I have ever before seen a thread move from substandard, and possibly manipulated, statistical reporting to the exercise of amateur dentistry, with such speed, as this thread surely has...

 

Like any statistic, it has a value along with a quality. Literally every statistic you ever read is imperfect. Employment data is based on a rotating sample of 8 groups, yet people treat this as the actual number of jobs in a state. Dwelling completions cannot account for dwellings demolished, so is only part of the story of added housing stock. As an analyst it is up to you to account for these inconsistencies when drawing meaning from the data.

On another note, the best leading indicator of properties prices would probably have to be "property prices" (again imperfect data). often prices will continue to accelerate for a short while as clearance rates fall. And if you wait until clearance rates are clearly falling to remove your "buy" rating from a market, you're already too late. Clearance rates are consequential data, not causal.

 

I don't know why there isn't a govt mandate to provide hard data in a timely manner to a govt list.

Here in NY every property sale is available for browser search on a database, shows who purchased (though some in company name) and how much they paid also information about the property itself.
- ACRIS Main Options

 

Regardless of it being dodgy or not, it drives people's behaviour on property investment.

 

anyone who has looked at it seriously , knows it's not an accurate factual stat , but what is important is the trend ., in terms of % and number .

increasing number of auctions clearance & or decreasing number , price and clearance are things that give a good overall feel of the market direction . I look at the ongoing trend but also how it compares with the previous year .

Cliff

 

It should be obvious that auction clearance rates are a horrible statistic to rely on. Yes, they might tend to track price growth at times, and can be somewhat predictive, but the correlation is loose and not particularly useful for reliable forecasting.

For one thing, they're easily skewed. If a market goes through a phase of unusually rapid growth, people can develop an expectation that auctions will get them a lot of money. Agents might also have this expectation, but then when price growth slows may come around to that realisation sooner. They might discourage unlikely auction sales, and only take properties they're very sure on to auction, meaning even though fewer properties are selling at auction the clearance rate remains higher.

I've noticed a lot of private exchanges, too. These are counted as "clearing auction" but if they've significantly increased (i.e. sellers accepting an offer either prior to or after the auction) it may indicate that some of the mania has dropped away, and that buyers are much more careful.