The property market has delivered yet another weekend of solid results with clearance rates above 60%, adding to hope that a prolonged period of economic stability and interest rate cuts will continue to send prices higher.
The news follows the release of figures from RP Data which showed prices increased 1.2% in September, while the RBA cut interest rates two weeks ago – and is expected to do so again next month.
And in a big sign of confidence, a key indicator in the Westpac consumer sentiment survey found more people are optimistic about buying a house, even though overall consumer confidence is still mild.
According to the Real Estate Institute of Victoria, Melbourne recorded a clearance rate of 62%. Although that’s down from last week’s 62%, it still manages to beat last year’s corresponding rate of 54%.
There were 578 auctions reported, and a further 690 are expected next weekend. And in Sydney, results were similar, with Sydney recording 58% on 606 auctions, compared to 60% last week and 55% last year.
Australian Property Monitors economist Andrew Wilson says the results are, once again, encouraging – but the industry isn’t getting too hopeful too soon.
“Certainly, the market is building on some reasonable momentum,” Wilson told SmartCompany this morning.
“But markets remain mixed, and consumer sentiment is still reasonably fragile. There is no doubt confidence is returning, and we’re seeing higher listings, but I think it’s still going to take time.”
“At the very least, it’s holding.”
Wilson says the market doesn’t need a jolt of confidence, but rather a steady rise in optimism which can only be achieved through stability in international financial markets, and possibly another interest rate cut next month.
“The Reserve Bank is certainly on watch with regard to the international economy and concerns over the strength of the resources boom. We’re seeing those underlying drivers right now, but it will just take time.”
“There’s nothing to get too excited about just yet. But it’s starting to build momentum.”