Auction clearance rates set tone as Melbourne firms, Sydney withers
About 65 per cent of homes auctioned in Melbourne last week found a buyer, slightly higher than the previous week, despite 300 more homes being put to the market, according to preliminary figures released by CoreLogic RP Data.
Sydney posted its lowest clearance rates of the year at 56.3 per cent and analysts warned the market could weaken further as buyers felt the burn of a lack of affordability after two years of roaring price growth.
Sydney and Melbourne are the only mature auction markets in the country, with figures from other capital cities considered too volatile to indicate the strength of housing in those markets.
CoreLogic RP Data auctions analyst Kevin Brogan said Melbourne had performed stronger than expected. “It was a record offering to the market, a shade over 1800, and there was a possibility that all of that stock might have caused a drop in the clearance rate, but it actually remained steady,” Mr Brogan said.
He noted the dour performance of Sydney would be watched over coming weeks as an indicator of how the market would perform next year. “We have now had four weeks of clearance rates below 60 per cent and obviously earlier in the year the clearance rates were significantly higher. It’s something that we’ll have to watch,” he said.
Australian Property Monitors senior economist Andrew Wilson said the numbers pointed to Melbourne being Australia’s strongest performing housing market next year.
He expected most capital housing markets to post price growth next year at a rate of between 4 per cent and 5 per cent. “Even though those (clearance) rates are down from a year ago, the actual volumes of sales is well up. It is a significant factor for the Melbourne market that clearance rates have held over that record-breaking (weekend),” Dr Wilson said.
“The Melbourne market looks like the best in the country. Certainly, confidence is quite reasonable in that market and it has ended the spring selling season on a positive note. It is not a boom market, it’s just solid.”
Demand nationally would slow unless there were more interest rate cuts, he added. “Wages growth is low and there is really no capacity to keep pushing prices up.”
Melbourne homes had the strongest value growth in the three months to October, the median dwelling price rising by 3.1 per cent to $600,000, according to CoreLogic RP Data.
Sydney home prices were boosted 1.5 per cent over the same period to $800,000. Prices in Sydney have risen more than 15 per cent in the past 12 months after a booming start to the year.