Property experts also say the market will slow this year as more buyers back away as variable mortgage hits close higher to 8%, the point at which consumer confidence usually takes a hit.
SQM Research founder Louis Christopher says the latest clearance figures, especially those from the Real Estate Institute of Victoria, show the industry is beginning to slow. The REIV recorded a clearance rate of 78% of Melbourne – the second week in one year during which results were under 80%.
"As we speak, in my opinion the market is slowing. We are seeing a considerable slowdown in demand, and we are going to see this for the rest of the year."
"We feel comfortable with our overall outlook for the rest of the year. And if you take forecasts of 7-9% growth this year as correct, with 5% already locked away in the first quarter according to the Bureau of Statistics, then we feel comfortable with quite moderated growth this year as a forecast."
Matthew Bell, economist at Australian Property Monitors, also says the auction market is cooling compared to March results which were "very, very strong". However, he also points out much of this moderation will be contained to more expensive property.
Bell has previously pointed out, along with Real Estate Institute of Australia president David Airey, that first-home owners do not usually enter the auction market for their first property purchase. Most of this activity is accounted for by upgraders and investors.
"I think most people have seen cooling price growth in this quarter, and that's starting to be evident in auction markets. In terms of the top end of the market, I have no doubt activity is going to fall because the growth has been excessively strong, well beyond the price recovery needed in the GFC."
However, Bell says he doesn't expect to see price falls with the demand for property continually strengthened by a shortage of housing and population growth.
"I don't think we'll see price falls. I think we'll see cooling and moderated growth, but those interest rate rises aren't going to cause the market to fall. When we hit that 7.5-8% variable mortgage rate, that's traditionally when confidence takes a hit."
In Melbourne, the REIV said the city's clearance rate was 78%, with chief executive Enzo Raimondo saying the impact of six interest rate rises, affordability concerns and stock levels "are clearly having an impact on demand".
There were 841 auctions reported, of which 655 sold, compared to the some weekend last year during which there were only 439 auctions with a clearance rate of 76%. The outlook for Melbourne is also good, with 2,400 auctions expected over the next three weekends.
In Sydney, clearance rates fell to 69% with 220 properties sold out of 299 on the market. Total sales reached $166 million.
In Brisbane, only seven properties were sold out of 27 on offer, indicating a clearance rate of just 27%. Total sales reached $2.6 million. Adelaide saw 25 properties sold out of 43 on offer, indicating a clearance rate of 54% and total sales of $10.2 million.
