Housing market back in boom-time mode

Australia’s two biggest residential property markets have recorded their best weekend auction results of the year-to-date

24 February 2020 | Dr Andrew Wilson, My Housing Market

More strong auction results were recorded on Saturday with the Sydney and Melbourne housing markets now clearly in boom-time mode. High and rising clearance rates indicate continuing strong buyer appetite for available homes despite surging auction listings – that remain well above the numbers recorded over the same weekend last year.

Disappointing data released by the ABS last week with a higher unemployment rate and continuing low wages growth has increased the chances of a near-term interest rate cut by the Reserve Bank which will only fuel current generally strong house price growth – particularly in Sydney and Melbourne.

Melbourne Auction Buyer and Seller Bonanza

Melbourne has recorded its first boom-time clearance rate of the year despite a flood of sellers keen to take advantage of the current hot market conditions Melbourne’s weekend clearance rate of 81.1% was higher than the previous weekend’s 79.6% and well ahead of the same weekend last year’s 55.6%.

Auction numbers keep surging with 1123 reported listed on Saturday – ahead of last weekend’s 649 and significantly higher than the same weekend last year’s 949. Melbourne is set to host over 1200 auctions next weekend.

Melbourne recorded a weekend median auction price of $879,000 which was higher than the previous weekend’s $826,500 and 14.9% higher than the same weekend last year’s $765,000.

February national clearance rates at boom-time levels

The city’s lower price regions all produced boom-time clearance rates at the weekend indicating perhaps strong activity from first home buyers utilising the first home buyer deposit scheme. Top performer was the West with 89.1% followed closely by the North East at 88.9%. Disappointing ABS data released this week revealed a higher unemployment rate and continuing low wages growth, increasing the chances of a near-term RBA interest rate cut which will only refuel strong house price growth.

Supercharged Sydney Auction Market Still Rising

The Sydney auction market recorded another booming clearance rate on Saturday – the highest for the year so far despite another surge in listings Sydney’s Saturday clearance rate of 84.5% was higher than the previous weekend’s 83.6%.

The results are well ahead of the same weekend last year’s which recorded a 68.7% clearance rate.

Sydney’s unit market’s Saturday top clearance rate of 87.9% perhaps reflects first home buyer activity from the first home buyer deposit scheme. Auction numbers surged again at the weekend with 826 reported listed compared to the previous weekend’s 506 and the same weekend last year’s 668. Sydney is set to host over 900 auctions next weekend Sydney’s median weekend auction price of $1,250,000 was again higher than the previous weekend’s $1,225,000 and the same weekend last year’s $1,230,000.

Four Sydney regions reported clearance rates over 90% with the Northern Beaches again top performer at 98.0% followed by the South 93.3%, Canterbury-Bankstown 91.3% and the City and East 91.1%.

Not much activity in smaller capitals but national trend is clearly higher

Nationally, Perth and Adelaide were the worst performing capital city markets with clearance rates of 35.3% and 52.1% respectively. The total number of auctions was low with Perth (29) and Adelaide (89), out of a combined 2,446 auctions across seven capital cities.

The national clearance rate was 77.7%, well ahead of the 49.4% posted for the same weekend last year.

Despite soft economic data, the chances of a near-term RBA interest rate cut will only refuel current strong house price growth.

Dr Andrew Wilson is Chief Economist of My Housing Market

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