This weekend’s auction clearance rates continue to reflect an overall slowdown in our major capital city property markets. Given the consistently sluggish results for the past month or so, it’s no surprise that the latest figures from RP Data-Rismark’s Home Value Index Release show the first monthly decline in dwelling values across our capital cities, after 17 consecutive months of solid growth.
Overall, property prices dropped by 0.7% in June (seasonally adjusted), representing the largest fall in house values since April 2008.
RP Data’s national research director, Tim Lawless, suggests that the RBA’s decision to increase interest rates is having the desired effect of cooling the property markets.
According to the Australian Property Monitors’ Home Price Guide, Melbourne fared the best this weekend, with 86 out of 128 properties on the auction market selling, giving a 65% clearance rate.
With 80% being the industry benchmark for “normal” market conditions, this figure still indicates that Melbourne real estate has ceased moving at the breakneck speed we witnessed during the first half of the year and that buyers are proceeding with more caution in the lead up to the Federal election.
Sydney came in a close second, with a clearance rate of 63% after 133 out of a possible 194 dwellings sold at auction, while the Adelaide market was less than impressive with only 13 properties auctioned, out of which 5 sold to produce a clearance rate of 38%.
Brisbane was by far the worst performer this weekend, with an alarming clearance rate of 6% after only 1 property out of the 16 that were up for auction selling.
These results coincide with RP Data-Rismark’s figures, which reveal a stagnation of property values in Sydney and Melbourne for the June quarter, with minimal growth of only 0.5% and 0.2% respectively and slightly better growth for Adelaide at 1.1%, while Brisbane’s growth rate was actually negative during the same period, at -1.3%.
Of course the good news to come out of all of this is that recent hype regarding an Australian housing bubble seems to have missed the mark, with a gradual easing of the accelerator rather than a bone crunching descent for our capital city property prices.
And what does it all mean for investors? Well, it seems that we are yet again entering a phase of the cycle where it’s time to start adding to your portfolio as buyers shy away and as a result, sellers start to fret.
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