The property market has survived its first major test of the year, with clearance rates remaining steady despite an increase in the number of auctions and a leadership battle under way in Canberra.
Although the past few weeks have delivered disappointing clearance rates in the 50% range, experts believe buyers have largely ignored the leadership tussle between Julia Gillard and Kevin Rudd.
“The attitudes by Australian consumers have tended to become more conservative over the past few years, which had its genesis in the last election. There is a sensitivity to what’s happening in politics,” APM economist Andrew Wilson told SmartCompany this morning.
“But I’m not sure whether we’ve seen the same reaction this time.”
In Melbourne, there were nearly 800 auctions and a clearance rate of 63%, only one percentage point lower than the same weekend last year.
Wilson says buyers are more likely to be affected by interest rate decisions than politics at this point, especially as the media has been building up the possibility of a leadership challenge for several weeks.
“The signs in Melbourne are certainly encouraging, although the rates aren’t setting the house on fire by any means, but there is a sense that in both Sydney and Melbourne there hasn’t been an effect from the political turmoil.”
“Now, whether that’s because the outcome was expected or not, that’s hard to say. Maybe it’s something that’s simply been factored into the buying decision, or perhaps people are just resilient to these sorts of political issues.”
The increased activity and steady clearance rates suggests the market is improving, Wilson argues, noting that rate cuts from November and December may be flowing through to the overall market.
“There is a growing confidence here. There are other factors at play, such as better affordability and so on, but also the pick-up in interest rates.”
“Perhaps we’re starting to see the effects of those decisions start to flow through now.”
According to the Real Estate Institute of Victoria, there were 772 auctions with 484 selling, resulting in a clearance rate of 63%. Last week, there were 623 auctions, while last year, that number was 994.
Sydney recorded a 56.6% clearance rate, with 503 auctions, while Adelaide and Brisbane recorded rates of 34.3% and 30.8% respectively.