Auction clearance rates strong as buyers ready for next rate cut
The preliminary auction clearance rate has held above 70 per cent nationally for the eighth consecutive week, as buyers look forward to the near certainty of a further cut in interest rates later this month.
Notwithstanding the traditional winter slowdown, the combined capitals’ preliminary clearance rate came in at 72.3 per cent, figures from data house Cotality show. That result was down slightly from 74.7 per cent recorded a week earlier, which was the highest preliminary clearance rate since July last year.
Based on results received so far, 74.9 per cent of Sydney auctions were successful, the third-highest preliminary clearance rate for the year to date. Melbourne recorded a 71.8 per cent preliminary success rate.
Listing volumes are lower in most markets but Louis Christopher, an analyst and founder of SQM Research, expects that to increase in the lead-up to the spring selling season.
“The market is clearly stronger than where we were this time last year. We’ve noticed a further pick-up in sentiment in Sydney,” he said on Sunday.
“We’re seeing some more strength in the upper end of the market, compared to the other end of the market for now. So clearance rates have been stronger, for example, in Sydney’s east compared to its west.”
While the top end has been performing more strongly recently, that could change soon with more action at the lower end of the market as first home buyers decide to enter the market, spurred on by lower borrowing costs.
Last week’s moderate inflation figures – the headline consumer price index CPI fell to a four-year low of 2.1 per cent – has set up a near-certain interest rate cut at the Reserve Bank board’s August 11-12 meeting.
“We believe that we’ll be seeing more first-time buyers enter the market in the second half of the year, particularly if we get another rate cut. A number of renters want to turn themselves into first-time buyers when they get the opportunity,” Christopher said.
There were some standout results in Sydney’s inner west as well, including a two-bedroom, freestanding home at Petersham that sold under the hammer.
The initial price guide for the property at 9 Petersham Street was $1.5 million, later increased to $1.6 million as interest increased. At auction, it sold for $1,978,000, bearing its reserve of $1.7 million.
Such was the interest in the property, it was sold after just 14 days on the market after its auction was brought forward by selling agents Cobden Hayson’s Rosemary Chen, Rita Lopresti and Matthew Hayson. More than 100 groups inspected it, with 17 registered bidders, five of whom competed, the agency said.
Amid the smaller markets, Brisbane’s preliminary clearance rate held above 70 per cent for the second week running, hitting 71.1 per cent.
In the ACT, the success rate slipped to 65.8 per cent, down from 73.7 per cent a week earlier, while in Adelaide, the preliminary clearance rate was 65.1 per cent, the lowest since the week of early June, according to Cotality data.
Auction numbers are expected to hold relatively firm over the coming week, with around 1570 homes set to go under the hammer, rising to around 1900 the week after as the spring selling season approaches.
