Auction clearance rate bounce points to house ‘price stability’
The weekend saw the It is the highest preliminary clearance rate since April 2018. Photo: ABC
The Sydney and Melbourne property markets are showing early signs of ending their steep slides, with a strong bounce in auction clearance rates on the first Saturday after the federal election.
Preliminary figures from CoreLogic show that 69.9 per cent of homes that went under the hammer in Sydney found a buyer, while 62.9 per cent of auctions in Melbourne cleared.
Those figures will be revised lower once extra results are submitted by agents, but Westpac senior economist Matthew Hassan expects the final result to come in about 65 per cent for Sydney and 60 per cent for Melbourne — the highest rate since April last year.
“Demand has clearly seen an initial boost from the clearer prospect of interest rate cuts and the removal of uncertainty around housing related tax policy following the Coalition’s re-election,” Mr Hassan wrote in a note.
“Prospective changes to loan serviceability assessments have likely given support as well.”
Last week, bank regulator APRA flagged a change in the way banks assess home loan applications, which would result in people being able to borrow larger sums.
Housing recovery remains ‘unclear’
Mr Hassan said the auction clearance rates in Sydney and Melbourne are now above the 50-55 per cent range “associated with price stability in both markets”.
Auction volumes also bounced back after election day, which had seen only 930 properties being auctioned, with 2,041 properties going under the hammer on Saturday — only slightly fewer than the same week a year ago.
However, he cautioned that the results did not yet indicate another bounce in home prices, and might not be sustained.
“The extent to which this generates a recovery in housing markets remains unclear,” Mr Hassan warned.
“While the initial response is positive, it remains to be seen how ‘follow through’ the move has.”
Auction markets were more subdued in most other cities, with Canberra’s clearance rate similar to Melbourne’s, Adelaide’s a little lower at 57.5 per cent, but Brisbane and Perth both below 40 per cent.
However, the auction markets in other cities are much less active than Sydney and Melbourne, with only a relative small percentage of properties being sold by that method.
