In the midst of a downturn, the Australian property market is experiencing a mini boom with Melbourne, the country’s second-largest market, recording its seventh-consecutive weekend of auction sales above 80%.
Melbourne recorded a clearance rate of 87% from 450 reported auctions, according to data from the Real Estate Institute of Victoria. The REIV says the city’s auction results for the last four weeks show a higher number of reported sales than the same four weeks in 2007, a “clear sign” the market remains strong.
The clearance rate was also strong in Sydney, jumping from 73% last week to 76%, with 141 properties sold at a total of $93.6 million.
Brisbane recorded a 50% result with 14 properties sold at a total of $6.7 million, while Adelaide saw just a 35% clearance rate with only six properties sold.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
David Airey, president of the Real Estate Institute of Australia, says the auction results are a good indicator of the market and show that the sector is not necessarily being held up solely by first home owners.
“Those properties that are selling at auction are generally not for first home owners. They don’t buy at auction, they tend to buy under a contract. That’s the amazing thing about the Melbourne market, these are investors and second and third buyers.”
“Auction results are a good indicator for the property market. Good results mean you have competitive buying. To buy at auction, people must have their money ready and finance approved, and in a market that’s pretty tough for finance that’s a very strong showing indeed.”
Adrian Jones, president of the REIV, says the results “have nothing to do with the first home owner’s grants”.
“Five weeks in a row, the clearance rate has been over 80% and in the longer term, on a year-on-year basis, it’s barely sustainable. We’ve swung like a pendulum from a volatile industry to strong auction results.”
“This is nothing to do with the grants, it’s driven by a shortage of stock. There are more people trying to buy property than sell. Coming up to winter there will still be a shortage of stock, and results will continue to be very, very healthy. Not in the high 80s, but still very healthy”.
Meanwhile, a new Mortgage Choice survey shows that three-quarters of property investors are waiting until the Government’s first home owner’s Boost grants expire at the end of the year to enter the market.
The survey shows 75% of the survey’s 1038 respondents are waiting until 2010 to buy, and 15% are looking to buy near the Melbourne metropolitan area.
The survey found 37% of respondents rated their level of confidence in the property market as “high” to “very high”, while 57% rated it “moderate”. Only 6% rated it “low”.
Queensland respondents are the most confident in their state’s market, with 40% of respondents claiming “high” or “very high” confidence levels.
Mortgage Choice senior corporate affairs manager, Kristy Sheppard, said in a statement the results confirm anecdotal evidence that investors are turning to the market.
“We have been hearing from a number of corners that property investors are all set and ready to go once the Boost has had its day. Competition from first homebuyers has been so intense since late last year that most investors seem to have stepped back for the moment.
“A large number are calling our loan consultants to see how much money they can borrow from the various lenders on our panel and getting their finances in order, all in preparation for hitting the ground running to purchase in 2010 and 2011,” she said.