This weekend’s auction results – Strong clearance rates continue confirming our market strength | Saturday October 19th

Auction clearance rates around Australia were once again strong this weekend, driven by strong demand at a time of low supply.

While some agents called it a Super Saturday of auctions because the number of properties going under the hammer is lifting, the level of good quality stock offered is still much lower that during the heady days experienced a few years ago (2013 -17) but has increased to levels approaching those of 12 months ago.

In the meantime, the markets continued to show strength this weekend, confirming increasing buyer confidence in our property markets and sellers are also returning to the market.
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The following graphic from Domain shows how our markets are moving from strength to strength on Saturday 19th October.

Add to this increased asking prices, higher median prices and more buyer interest – there is no doubt are markets have turned the corner – in fact the Melbourne and Sydney markets bottomed out around in June this year.

This reflects what our teams at Metropole’s offices in Melbourne, Sydney and Brisbane are finding on the ground – increased buyer enquiry and strong general interest in our housing markets because of the expectation of rising prices. ⠀

The prospect of easier access to finance, falling interest rates and a tax cut has boosted buyer confidence, driving strong auction results across Australia.

Here are the auction clearance rates as reported by Domain

Melbourne real estate auction results

The preliminary auction clearance rate for Melbourne as reported by Domain today was a strong 72.4% with 828 were properties listed for sale under the hammer (much the same as the 846  week) and so far only 629 results have been reported and 38 properties were withdrawn from sale.

The final clearance rate is likely to drop to below to around 68%, much like last weekend’s final auction clearance rate which was revised to 68.2%.

Realestate.com.au reported that there were also 912 private sales in Melbourne this week, a few more than the number reported last week – 889

The year started with a typical Melbourne auction clearance rate in the 50%’s so there has been a significant increase in sentiment, especially since after the Federal election.

A year ago in 2018 the auction clearance rate was 43.9% and 896 properties were listed for sale by auction.

In 2017 (just as the Melbourne property market entered its slump phase) the clearance rate was  69% with 1,047 properties listed for auction.

The following graph from Dr. Andrew Wilson of Auction Insider clearly shows how things have changed.

Sydney real estate auction results

The preliminary auction clearance rate for Sydney as reported by Domain today was an extraordinarily  strong 81.5% with 614 properties listed for sale under the hammer  – much like last week when 629 properties were auctioned. So far 512 results were reported and 40properties were withdrawn from sale.

The final clearance rate is likely to drop to around 76 – 78 – a little higher than last weekend’s final auction clearance rate which was revised to 75.6%.

This year started with a typical Sydney auction clearance rate in the low 60%’s, so there has been a significant increase in sentiment.

Realestate.com.au reported that there were also 1296 private sales in Sydney this week  – significantly more than reported last week -961

A year ago in 2018 the auction clearance rate was 39.8% on 561 auction listings.

In 2017 the clearance rate was 57% with 666 properties listed for auction.

The following graph from Dr. Andrew Wilson of Auction Insider clearly shows how things have changed.

Commentary:

Both Melbourne and Sydney home auction markets continue their strong trends.

These trends reflect what our teams at Metropole’s offices in Melbourne and Sydney are finding on the ground – increased buyer enquiry and general interest in our housing markets because of the expectation of rising prices.

However the number of properties listed for auction still remain low compared the “good old days” (2013-17) but we can expect more properties to go to auction now as vendors feel more comfortable that their homes are likely to sell.

These strong results occurring week after week are another confirmation that we’re past the market bottom in Sydney and Melbourne.

Buyers are back with a little FOMO (Fear Of Missing OUT) now that the media keeps reporting that dwelling values in Sydney and Melbourne have risen in each of the past two months ending a near two-year slide that saw prices tumble 15% from their July 2017 peak in Sydney and around 12% in Melbourne.

The following graph from the ANZ bank shows how in the past rising dwelling prices followed on from rising auction clearance rates, however tighter credit and soft economic conditions will constrain property price growth after the initial post election bounce.

And with this month’s interest rate cut  and another almost certain early next year, the markets will continue to strengthen.

See the graph from ANZ below which shows how interest rate cuts (red squares) leads to rising property values.

If cheaper mortgage rates lead to rising property values, this will create a policy dilemma for the RBA which doesn’t really want this to occur, but clearly its focus is on jobs creation.

which show the clear spike in auction clearance rates since the election

 

Some interesting facts courtesy of  Dr. Andrew Wilson

The following charts clearly show the strength of the Melbourne and Sydney auction markets as at the end of last month – September

 WATCH AND READ: Australian Housing Market Update October 2019 | PROPERTY INSIDERS VIDEO