- Momentum in the Australian property market appears to be building as preliminary auction clearance rates surpassed 83% over the weekend.
- While the final figures will come in lower – Sydney and Melbourne are expected to finish at 84% and 73% respectively – it indicates strong demand could continue to squeeze a tight market.
- “Such strong auction results signal further upwards pressure on housing prices amidst extremely tight advertised supply levels and above average buyer demand,” CoreLogic noted in its early analysis of the weekend’s results.
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Buyers are fiercely competing against one another over a limited number of homes, as auctions fire up around Australia’s capital cities.
Preliminary clearance rates indicates around four in five homes sold at auction over the first weekend of February.
“Auction markets have returned a strong result on higher volumes this week, with the combined capitals weighted average preliminary clearance rate holding above 80%. Every capital city recorded a clearance rate above 70% as volumes continued to surge higher after the festive period slowdown,” CoreLogic noted in its weekend analysis.
“Such strong auction results signal further upwards pressure on housing prices amidst extremely tight advertised supply levels and above average buyer demand.”
While due to come in lower when results are finalised later this week, the early data suggests demand for property is overwhelming what’s on the market.
According to Domain’s early results, the hammer came down on 89% of the 400-odd Sydney properties that went to auction. Melbourne meanwhile returned a 78% preliminary clearance rate on more than 520 auctions.
According to AMP Capital chief economist Shane Oliver, both will likely round down to 84% and 73% apiece, with the housing picture remaining complex.
For comparison, at the same weekend last year, Sydney and Melbourne returned clearance rates of 77% and 67% respectively. In other words, while demand would appear to be heightened, it’s probably not the unrepentant boom it may appear at first glance.
As population growth remains in the doldrums, investors remain largely on the sidelines. Construction meanwhile is continuing relatively unabated as the apartment market in cities like Sydney and others appear soft.
A construction boom is really interesting to see, especially when immigration is going backwards. Not a good sign for house prices https://t.co/8RcF8K2VCH
— Stephen Koukoulas (@TheKouk) February 3, 2021
Nor are auction clearance rates laser accurate, with different companies interpreting the data differently to recording diverse results.
With lockdown restrictions hampering sales throughout 2020, buying activity does however appear to be rebounding strongly on rising volumes. For example, in Melbourne there were around 220 more auctions last weekend compared to last year, an increase of 61%.
Australia’s smaller cities meanwhile appear to be hovering around similar clearance numbers, with preliminary data indicating around 80% of Adelaide and Canberra homes selling.
With analysts noting the auction season started early this year, it’ll be key to see whether markets nationally can continue to absorb rising volumes.
- The RBA believes there’s no housing bubble just yet, but says it will intervene if Australians go crazy on debt
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