Even more than usual, Australia’s housing market has been a topic of intense discussion over the past week, dominating the headlines thanks to renewed efforts from the RBA and APRA to reduce building financial risks.
Interest-only housing loans have been curbed to just 30% of total new mortgage lending and the banks have been warned to apply more scrutiny on the ability of borrowers to service their debts.
Now, in the lead up to Easter, Australia’s housing market is about to face its next big test.
Auction volumes are going to increase noticeably, especially in Sydney and Melbourne where more than 1,300 are scheduled, the two markets where the concerns over bubbly prices are the most acute.
“The combined capital cities are set to see a significant increase in auctions over the week, with 3,275 scheduled to take place, up from last week’s 2,657,” says CoreLogic.
“The number of auctions scheduled to take place this week is expected to increase across all of the capital cities with the exception of Brisbane, where activity will remain relatively steady.”
CoreLogic says that the ramp up in auction activity is consistent to what has been seen in previous years where volumes increased in the lead up to Easter.
It’s going to be more than interesting to see whether recent concerns echoed by the RBA and APRA, and tighter macroprudential measures implemented by the latter, will resonate with prospective home buyers.
While the concern being expressed towards the housing market has gone up a cog or two this week, it’s not exactly something new.
And, as yet, it’s had little impact on clearance rates, particularly in the nation’s southeastern capitals.
According to CoreLogic, the final combined capital city auction clearance rate for last week came in at 75.9%, up from 74.5% in the prior week.
Sydney and Melbourne, true to recent form, both registered clearance rates of just under 80%.
Very hot levels.
The question everyone will be asking now is whether the events this week will see them cool alongside the weather outside.
Earlier this week, CoreLogic released its capital city Home Value Index report for March, revealing that prices in Sydney and Melbourne surged by 18.9% and 15.9% respectively over the past year.