Rate cut needed to spark disappointing auction sale rates, expert says
An interest rate cut might boost vendor confidence and get homes back on the property market, an expert has noted as clearance rates continue to remain steady since the beginning of the year.
And while the number of new listings has continued to increase, the number of properties on the market is still below the same figures from this time last year.
According to the Real Estate Institute of Victoria, Melbourne had 736 auctions over the weekend, with a clearance rate of 61%, following last week’s 59% and the 59% recorded during the same period last year.
However, for the same period in 2011 there were 872 properties put up for auction, showing numbers are well down.
Sydney recorded 422 listings and a 60.3% clearance rate, up from the 337 recorded last year, while Adelaide and Brisbane recorded clearance rates of 32% and 34% respectively.
SQM Research managing director Louis Christopher says the rates have been consistent during the entire year and are likely to remain about the same unless the market changes. One of the things that could change it, he says, is an interest rate cut.
“The clearance rates we’re recording at the moment are pretty weak, and they haven’t changed. It’s pretty consistent.”
“It’s going to take a cut to interest rates to change it, and then actually passed on to the consumers by the banks.”
However, Christopher says even if the RBA passes on a rate cut, it’s going to be difficult to give consumers a boost as the banks are making their own rates decisions independently.
“At the moment, that’s uncertain, and that’s going to be negative for sentiment.”
“We do have some of the first ingredients we need, such as concerns about Europe easing. But I think at this stage it’s going to take a cut, perhaps a 0.25 point cut, to get things going again.”
However, auction listings are increasing, with Melbourne set to host over 1000 auctions next weekend before dwindling during Easter.