A tale of 2 city property markets by Dr. Adrew Wilson

Dr. Andrew Wilson, Senior Economist for Australian Property Monitors gives his take on the state of our 2 big property markets – Sydney and Melbourne.

Here’s what he had to say about the Sydney property market:

Sydney’s record breaking spring weekend auction market continued to produce strong results with yet another 80 percent plus clearance rate recorded – but only just this time. The 80.1 percent result was the lowest for 5 weeks and was the second consecutive weekend of falling clearance rates following last weekend’s 80.6 percent.

Nonetheless the result was an unprecedented 18th weekend out of the past 20 that clearance rates have been over 80 percent with the other two just under at 79 percent.

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And high clearance rates have been achieved despite record number of listings. So far over November 3062 properties have been listed for auction, well ahead of last year’s 2148 over the same period. November will clearly break the record for the highest number of auctions ever conducted over a month in Sydney – and the highest ever number of auction sales.

Next weekend Sydney is set to also host its highest ever number of weekend auctions with 900 plus properties set to go under the hammer. This will present the market with an enormous test particularly give early indications that Sydney’s spring auction market to end all spring auction markets may have peaked.

Strong auction results were recorded in a number of Sydney’s suburban regions at the weekend with the upper north shore leading the way with a stunning 89.8 percent result. This was closely followed by the inner west with 87.4 percent, the lower north was next with 86.8 percent, the northern beaches with 85.7 percent and Canterbury Bankstown with a rate of 83.9 percent.

Sydney’s weekend auction market has scaled new heights over spring with record levels of buyer and seller activity set to continue until the season closes in three weeks but perhaps below its seasons peaks.

Auction clearance rates are a proven reliable measure of overall housing market activity in Sydney.  Sydney’s weekend auction clearance rates averaged 80 percent over the September quarter this year, significantly higher than the 60 percent averaged over the September quarter last year.

Unsurprisingly, Sydney house prices have also increased significantly over the same period with the September quarter median now 10 percent higher than that recorded over the September quarter last year.

This is clearly the biggest annual increase in quarterly house prices recorded since September 2010, a period which also featured unsurprisingly a corresponding surge in auction clearance rates.

Here’s what Dr. Wilson had to say about the Melbourne property market:

Melbourne’s auction market weakened at the weekend recording its lowest clearance rate this spring so far. The weekend rate of 70.3 percent was down from the previous weekends 73.3 percent and may indicate that high listing numbers are now impacting on underlying buyer activity with reduced competition for properties.

The result was well below the 74.1 percent averaged over spring so far and may be a foreteller of declining auction buyer activity over the remaining three weekends of the season.

No real surprise that buyer activity may be declining under the weight of high listing numbers as sellers have rushed to take advantage of the best market conditions for four years. 3078 homes have been listed for auction over November so far, well ahead of the 2695 conducted over the same period last year.

And the next two weekends will present a significant challenge to the Melbourne market with consecutive super Saturdays with over 2500 metro properties set to saturate an auction market already appearing  to have peaked.

The best suburban region auction result in Melbourne this weekend was recorded by the outer east  with another strong auction clearance rate of 80.5 percent. This was followed by the inner east with 74.8 percent, the north east with 70.4 percent , the north with 70 percent and the inner city with 68.8 percent.

The Melbourne housing markets resilient performance so far this spring may be waning under the strain of a mountain of auction listings. The market overall has been solid rather than strong although some suburban pockets within the outer east and inner east have recorded consistently strong auction results.

Auction clearance rates are a proven reliable measure of overall housing market activity in Melbourne.  Melbourne’s weekend auction clearance rates averaged 70.5 percent over the September quarter this year, significantly higher than the 56 percent averaged over the September quarter last year.

Unsurprisingly, Melbourne house prices have also increased significantly over the same period with the September quarter median now 8 percent higher than that recorded over the September quarter last year.

This is clearly the biggest annual increase in quarterly house prices recorded since September 2010, a period which also featured unsurprisingly a corresponding surge in auction clearance rates.

I gave my thoughts on what’s happening in this blog today: Auction clearances are lower – has the heat gone out of the market?

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Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been once agin been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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