The official launch of the year in property sales has begun, with both Melbourne and Sydney recording some of the best auction clearance rates seen in years – leading some experts to believe the market is on the turnaround.
Property analysts say not only have auction clearance rates continued to exceed those of last year, but better results are starting to be seen across the board. While most of the market has been contained to prestige sales in Melbourne and lower-cost markets in Sydney, that trend is moving into other market segments.
“There are the first signs of a revival in the middle market in Melbourne,” says Australian Property Monitors chief economist Andrew Wilson.
“The auction activity has been skewed to the top market there and the bottom end in Sydney but we’re drifting into either end of the sector now.”
The latest figures from the Real Estate Institute of Victoria show the city recorded a massive 903 auctions with a 73% clearance rate, compared to 70% last weekend and 57% this weekend last year – the REIV pointed out it was the strongest result in over two years.
“There can be no doubt the improving trend that started last year has continued this year and it reflects improved consumer confidence,” chief executive Enzo Raimondo said in a statement.
APM’s own data shows Sydney recorded a clearance rate of 76%, up from 69.3% last week and 55% last year, with the organisation recording 316 reported auctions.
While SQM Research managing director Louis Christopher tells SmartCompany he believes the Sydney result is lower based on the fewer number of reported auctions, the results are nonetheless a positive sign.
However, he says the market is still fragmented, with “some areas doing quite well…and others where values are falling”.
Wilson says the results could be attributed to some other aspects of a strengthening economy, but says it’s more likely several interest rate cuts have finally had an impact.
“It’s an extraordinary weekend, really,” he says. “You can’t use any contingency to explain them away other than the fact this is a rising market.”
“The first couple of weeks of this year were quite good, but with low listings. This is a high listing weekend, and we’re seeing a rise in seller numbers in line with these strong clearance rates.”
Next week is expected to be another strong weekend in Melbourne, with nearly 1,000 auction slated. Wilson says the success of the past few weekends will bleed into the next few months.
“Its own success will build momentum, and now I think this becomes an issue for policymakers,” he says.
“Is it really a surprise we have a rising housing market with historically low interest rates? History tells us low interest rates will fuel activity, and we’re seeing that now.”
Wilson says the prestige market in Melbourne has historically been the saviour of the auction-hungry city, but that success is now bleeding into the mid-range market, a good sign the market in general is improving.
“We didn’t really see this momentum building last year. So it looks like buyers and sellers have just been waiting.”