Sydney’s auction clearance rates are pointing to a slowing residential property market but strength in demand in Melbourne continues.
Only 52.1% of homes in Sydney were sold at auction last weekend, well down on the rate of 65.3% for this time last year, according to auction result data from market analyst Australian Property Monitors. The 93 houses that failed to sell doubled last week’s figure.
By contrast, Melbourne’s property market appeared healthier, with high volumes, well over double last week’s figures, and a clearance rate of 72%. The 213 homes sold fetched a total of $91.9 million – $10 million more than this time last year.
The results follow figures from the Australian Bureau of Statistics that show investors flooded back into the Victorian housing market last year. They borrowed almost 30% more funds last year to beat home buyers as prices soared.
Rental property investors borrowed $15.6 billion in 2007 to buy existing homes in Victoria: 29.4% more than a year earlier, and 10 times the amount they borrowed in 1995, the ABS figures show.
But signs of distress ahead are starting to appear. Almost a quarter of mortgagees expect it will be “quite hard” or “very hard” for them to keep up repayments on their mortgage over the next five years, according to a new Datamonitor survey of 2000 home owners.
Only 18% of respondents said they would expect to find it “quite easy” or “very easy”. Moreover, 24% report experiencing financial stress about their mortgage situation.
Last Thursday SmartCompany reported that the Real Estate Institute of Victoria is expecting a jump in the number of properties coming to market in the coming months.
The question is whether prices will hold.