Declining auction clearance rates in our major capital cities reflect what we in the industry are already witnessing on a daily basis. The property markets are undeniably cooling from the boiling highs they reached at the end of 2009 and during the first half of this year.
Melbourne clearance rates have come down significantly, to just 58% this weekend, with 98 properties out of 162 houses up for auction actually selling. This is quite a low figure when you consider that the “norm” for Melbourne is generally around 70%.
On the other hand, Sydney is still showing positive signs of steady growth with 142 out of 184 properties selling at auction, giving a healthy clearance rate of 71%.
In Adelaide, only 17 properties were up for auction and 13 sold, producing another fairly positive clearance rate of 68%. While Brisbane fared the worse, with only10 properties on the market and just 3 managing to sell, producing a clearance rate of 25%.
A number of factors are contributing to the slow down, including all the talk in the media of a property bubble, affordability issues and interest rate uncertainty. And then there’s the upcoming election.
Traditionally, a lot of would-be investors and home buyers are reluctant to buy before an election, opting to wait and see who wins and what this might mean for the state of the economy and their own personal financial situation.
Of course for investors who understand that when others are overly cautious about buying, causing the markets to slow as they are now doing, it is often the good time to add to your portfolio. Why? Because these conditions signal that we are in a buyer’s market.
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