Auction clearance rates have always been used a measure of the heat in the market. The bulls would squeal with delight when clearance rates were 80% plus, but now less than half are clearing at auction its an invalid number? I guess the stat's only count when they suit your personal opinion. And then there is the old chestnut "just look how well they have performed in the past" as if the recent past performances dictates what houses will be selling for in 2012.Past performance does not guarantee future results.
The facts remain, auction clearance rates are a good indicator of where the market is heading, not where it has been in the past. Sub 50% and the stock keeps growing every week, giving buyers more options. You only need a small percentage of the overall market to drag down prices across the board.
Its like saying that only 10% of this company's shares sold today but the other 90% are tightly held and worth more and will be worth more in the future because that's whats happened in the past. Sounds kinda silly when you put it like that doesn't it?
So more houses sell privately than at auction, wouldn't that be expected when the clearance rate is so low? People aren't caught up in the frenzy anymore, trying to out do each other at auctions with the belief that this is the house I simply must have as another one this good might not ever come up for sale again!
It's a plain as day indicator that the market is heading south with no sign of it changing direction anytime soon.
