Auction results improve but experts say recovery won’t come until 2012

The improved auctions results came after a number of other pieces of positive data. The proportion of first home buyers in the market rose to its highest in nearly a year and a half, and recent RP Data figures showed prices only fell by 0.2% in September – the lowest fall since February.

APM economist Andrew Wilson says while the data is a good sign property markets are improving, it may be a few months until the recovery gains strength.

"The market closes down over January because the industry itself closes down. Certainly there are holiday sales and a few bits and pieces, but people who sell during that period tend to be people that are forced to do so."

"It's just a seasonal effect. Even in the boom period, you see a tapering off in prices growth, but that tends to be picked up in the following quarter. You're going to have a lot of build-up in January and February towards March."

The prospect of a delayed benefit comes as the spring selling season enters its final few weeks. Investors had hoped the season would see a rise in the number of buyers, but an increase in the number of listings has dampened any hopes of price rises.

Instead, new data showing a rise in construction activity and housing commitments has given investors hope. But as Wilson points out, the market is about to shut down and any benefit won't be seen until February or March – by which time another interest rate cut may have occurred, according to some commentators.

"A lot of people make a decision to sell in February, so you have that pre-Easter rush. There's an advertising campaign a month or so before that, so it's a fairly fertile decision period for those going into property."

The weekend's auction results gel with the prospect of a recovering market. Sydney recorded a 57% clearance rate, as buyers rushed in to take advantage of the state's expiring first home owner benefits.

Melbourne had a 54% clearance rate, with 713 auctions, while Brisbane and Adelaide recorded results of 47% and 38% respectively.

Wilson says the results show a good recovery in Sydney, raising prospects of higher activity in February-March 2012.

"There is no doubt that Sydney has improved, after being flat for the year. It's certainly showing signs of price growth and improvements in both sales and buying activity."

"Over the next few week as we get more listings, these will be the tests for the market. As we see higher numbers, we get an idea of where the market is."

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written by rgarven, November 14, 2011

This is precisely what I thought would happen regarding first home buyers. They have all been advised to rush into the market before the first home buyer subsidy expires and they will be required to pay the full amount of stamp duty on an existing property but not for building your own come 1 July, 2012. This will generate even stronger demand in November and the first week of December for this segment. However I believe once this expires they will leave the market in droves. I think prices will come under more pressure and vendors will have to meet the market and come down in price. This could mean even more savings for people who will be sitting on the sidelines.