The momentum of the property market is enduring despite the countdown to the federal election, which is now less than two weeks away.
Sydney is on track for a record-breaking month this August, as over the weekend it posted another strong result with a clearance rate of 79%.
It was the first weekend in more than six weeks in which the clearance rate for Sydney had dipped below 80%, but Australian Property Monitors senior economist Andrew Wilson told SmartCompany this would not affect the month’s strong average.
“We’re on track to record the highest even auction clearance rate for a month. The previous record was 78% in 2002 and when we get the adjusted rates through we will be very close to that mark.”
“We do get a real ceiling in auction clearance rates, they don’t tend to move into the 90% mark for capital cities given it’s an open-market environment. So it’s just about as strong as it gets and for Sydney it’s the strongest it’s been historically,” he says.
Wilson says buyers in both Melbourne and Sydney have been unperturbed by the upcoming election.
“We usually don’t see a huge impact from elections on the housing market unless there is a significant differentiation on the policies.”
“There isn’t a proposal of a big policy change like the GST or WorkChoices. It’s all same old, same old and the result seems to be reasonably predictable based upon the polls, so there is some certainty about what the result will be,” he says.
Wilson says the strength of the market currently overrides any other factors associated with the political cycle.
“In Melbourne we had a clearance rate of 77.7% this weekend, the strongest for the year, as it’s now starting to get toward those numbers of 2009-2010.
“The trend over the last four weeks has been rising in Melbourne. Those 80% numbers were the strong numbers of 2009-2010, so it seems the market is moving from solid to strong at the moment,” he says.
The market is being driven by the record-low interest rates, as well as people cottoning on to the current momentum.
“In Sydney it’s the investors and in Melbourne it’s the change-over market who is buying,” Wilson says.
“In Melbourne it’s the outer-eastern suburbs which are very strong, recording rates of over 90% this weekend. Those outer regions are the meaty middle market in terms of prices and buyer types.”
In recent weeks there’s been a lot of talk of a property house-price bubble, with analysts debating the likelihood of a boom.
Wilson says such a surge is unlikely.
“I don’t think we’re in boom territory. In Melbourne, house prices are still below the 2009 to 2010 levels and this is what we would have called a boom.”
“House price growth was around 30% that year, but in Melbourne this year we’re look at around the 5% to 7% mark,” he says.
Wilson says in Sydney house price growth is predicted to be between 7% and 10% and there are a number of “hurdles” facing the property market which will prevent either a boom or a bust.
“This is higher than I anticipated earlier,” Wilson says.
“It’s at the top end, but it’s still well below a number of other years in terms of prices growth. The other factor is we do have some concerns over the future direction of the economy, with unemployment predicted to rise to 6.25% next year.”
The likely rise in unemployment is tipped to have a moderating effect on the market.