For all the warnings about Australia’s housing market we’ve heard in recent months, be that it’s a bubble or about to be oversupplied with new apartments, there’s few signs as yet that it’s impacting buyer sentiment.
Indeed, coinciding with the latest bout of doomsday talk — something that tends to roll around every few months or so like clockwork — capital city auction clearance rates now sit at the highest level seen since early 2015.
On that one metric, there’s few signs of fear; rather, frenetic levels of buying.
According to preliminary figures released by CoreLogic earlier today, a national capital city auction clearance rate of 80.2% was achieved last week, led yet again by strength in Australia’s largest and most expensive housing markets, Sydney and Melbourne.
Of the 2,641 auctions held across Australia’s capitals last week, the group received results from 2,187. Of those, 1,773 were cleared.
Big numbers, resulting in the preliminary figure being higher than the already healthy level of 76.2% seen a week earlier.
Not only that, it was well above 64.9% level recorded in the corresponding week in 2015, helped in part by record-low interest rates along with far fewer properties being taken to auction.
At 2,641, the number of auctions held last week was well below the 3,143 figure of a year earlier.
“Every capital city except Perth has recorded a preliminary clearance that was higher than a year ago, while the two largest auction markets, Sydney and Melbourne, recorded a preliminary clearance rate higher than 80%,” said CoreLogic.
This table from Corelogic shows the performance of individual capital cities last week, with some red-hot performances coming from the Sydney and Melbourne auction markets.
To underline just how hot the auction markets are in Sydney and Melbourne right now, this table from CoreLogic breaks down the performance by region, starting with Sydney.
Truly hot in some areas, particularly within the inner city ring.
While auction clearance rate are heating up — something that suggests that suggests prices will be next if the past relationship between the two is maintained — it has, as yet, failed to result in a noticeable acceleration in price growth.
According to the separate capital city home value index released by CoreLogic, prices in Australia’s five mainland state capitals rose by just 0.1% last week, the same level seen over the past month.
Prices rose by 0.3% in Sydney and 0.6% in Brisbane, offsetting declines of 0.7% and 0.6% in Adelaide and Perth.
However, in 2016 alone, prices in capital cities have jumped by 8.6%, led by Sydney and Melbourne which have logged double-digit growth of 13.3% and 10.2% respectively.
In a week when many will be watching Australia’s quarterly inflation report for clues on whether the RBA will add to the two rate cuts already delivered this year, the bar to further easing appears to be getting higher given recent developments in Sydney and Melbourne will no doubt be perceived as adding to, rather than diminishing, financial stability risks right now.