This weekend’s auction results – Clearance rates around Australia confirm our markets are turning

Auction clearance rates around Australia were strong this weekend continuing their upward trend and confirming increasing buyer confidence in our property markets.⠀⠀
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The following graphic from Domain shows how our markets are moving from strength to strength.

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.

However the number of properties offered for auction was once again low this weekend and it will be interesting to see what happens in the Spring selling season, but with these types of results more sellers are likely to be prepared to place their properties on the market.

Melbourne real estate auction results

The preliminary auction clearance rate for Melbourne on Saturday 17th August was reported by Domain as 73%, higher than  the figure for last weekend.

514 properties were listed for sale by auction this weekend  – considerably more than last week’s 474 properties and so far 397 results were reported meaning the final clearance rate will end up somewhere around 69%.

Last week’s clearance rate was revised to 67%.

Realestate.com.au reported that there were also 835  private sales in Melbourne this week. (827 last week.)

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 51% of 813 properties listed for sale by auction.

In 2017 (before the Melbourne property market entered its slump phase) the clearance rate was  72% with 797 properties listed for auction (considerably more than the current number of auction sales each weekend.)

Sydney real estate auction results

The preliminary auction clearance rate for Sydney as reported by Domain today was a very strong 78% with only 376 properties listed for sale under the hammer (324 last week) and so far 265 results were reported.

This unreported rate means the final clearance rate is likely to drop to around 74% – still a very strong result indeed.

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 1256 private sales in Sydney this week (1142 last week.)

A year ago in 2018 the auction clearance rate was 50% on 503 auction listings.

In 2017 (as the Sydney property market was entering its slump phase) the clearance rate was 63% with 566 properties listed for auction.

Commentary:

Both Melbourne and Sydney home auction markets remain strong reflecting 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.

And in some ways this becomes a self fulfilling prophecy as with few “A grade” homes and very few “investment grade” properties for sale, increased buyer activity is pushing sale prices above vendors’ auction reserve.

However the number of properties listed for auction remain low compared to previous years, meaning to get any clear trends we really need to see volumes of properties offered for sale at auction rising.⠀⠀⠀

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.

There was also a lot of good news reported this week:

• Employment rose for the 33rd out of 34 months in July.
• Jobs increased by 44,000.
• Full-time jobs rose by 34,500.
• The participation rate rose to a record high of 66.1% – the fact that more people are looking for work is why the unemployment rate isn’t dropping.
• The Westpac/Melbourne Institute survey of consumer sentiment index rose by 3.6% (the biggest lift in six months) to 100 points in August. The sentiment index is near its long-term average of 101.5 points. The reading says optimists equal pessimists.
• The ‘time to buy a dwelling’ index rose by 3% to 126.9 points in August – the highest level in 5½ years.
• The NAB business confidence index rose from +2.3 points in June to +3.9 points in July.

Recently RBA Governor Phillip Lowe reiterated his desire to lift inflation by increasing employment, in essence confirming we will have further interest rate cuts which will only further fuel our property markets.

If cheaper mortgages leads 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.

Of course, the number of properties listed for auction in our two big capital cities remain very low compared to previous years, meaning to get any clear trends we really need to see volumes of properties offered for sale at auction rising.

Increased buyer interest and strong auction clearance rates should give sellers who’ve been holding off selling their homes some encouragement to put their homes on the market, especially since the winter lull over school holidays is now over.

At the same time falling interest rates and tax cuts on the way should bring buyers back into the market.

Dr Andrew Wilson, chief economist of MyHousingMarket.com.au comments:

Here are the auction clearance rates as reported by Domain

Shane Oliver, Chief economist of AMP Capital tweeted the following graphs which show the clear spike in auction clearance rates since the election – as well as how lowering interest rates drive our property market.

The second graphs shows the very low volume of auction sales over the last few months.

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