- Sydney’s median auction price is approaching $1.7 million, according to the latest Domain figures.
- The price surge comes on the back of soaring clearance rates, as buyers outnumber the stock of homes on the market.
- Australia’s biggest banks, Westpac and CBA, meanwhile are forecasting 20% and 16% price growth over the next two years.
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Property prices are nearing record highs in most of the country, and they show no signs of slowing down.
According to the latest Domain data, the median price for a house at a Sydney auction has now hit $1.68 million.
The eye-watering sum comes as auctions reach fever point. Final clearance rates show that over the weekend eight out of every 10 properties sold at capital city auctions.
Sydney, Adelaide and Canberra all surpassed the 80% mark, while Brisbane and Melbourne hovered around the mid 70s, according to CoreLogic. It’s not an outlier either, with the national clearance rate sitting above 84% for the month of February.
To put the mania in more concrete terms, consider that in recent months some homes have been selling for hundreds of thousands of dollars, or even millions, above reserve, as multiple buyers try to outbid each other on a limited stock of properties for sale.
The Bellevue Hill home of property developer Chris Sanchez sold at auction last night for more than $1.5m over reserve, setting a new street record.https://t.co/HcDtca1b3S #realestateau #NSW via @_SteveNicholls
— Realestate News (@NEWSProperty) December 16, 2020
Record low interest rates, the free flow of credit, government incentives and bolstered savings balances have all been attributed to the rise in recent months.
However, while the average punter might baulk at the prices being touted by the property industry, banks and policymakers aren’t blinking.
The Reserve Bank has so far dodged the issue, with RBA Governor Philip Lowe maintaining that current price growth hasn’t become “unsustainable”.
Matt Comyn, CEO of the Commonwealth Bank and chair of the Australian Banking Association (ABA), meanwhile is unperturbed by the heat in the market.
Speaking last week, Comyn said that fears of a housing bubble were allayed by the fact that owner-occupiers rather than investors were the driving force behind market at the moment.
So too the reality that price growth is more evenly distributed than during previous booms.
“If you go back to 2014-15, most of that growth was coming out of Sydney and Melbourne … at the moment, the fastest-growing capital cities are Darwin, then Perth, then Canberra.” Comyn said.
“There’s a number of regional locations that are growing very rapidly, in fact Sydney and Melbourne are not strong on a relative basis.”
Banks expect prices to go higher still
Those who feel priced out of the market may not take much comfort in that analysis. Nor will they like the fact that prices are forecast to continue to surge.
CBA for one is anticipating national prices to rise 8% this year and 8% again in 2022. Not to be outdone, Australia’s second largest bank Westpac is calling two consecutive years of 10% price growth.
“The bottom line is that Australia’s housing upturn now has strong momentum that looks to be lifting further and will remain well supported by monetary conditions and an improving economic backdrop,” Westpac chief economist Bill Evans said.
Still, with wages stagnant and progress on reducing unemployment expected to stall in the coming months, the RBA will be closely for signs that the market is too hot for its own good.