The property sector has continued to strengthen over the weekend with auction clearance rates now besting figures from a year ago, days after the Reserve Bank decided to cut the official interest rate by 25 basis points.
Although banks didn’t cut their rates until Friday afternoon, and an effect is not expected to be seen for several weeks, experts suggest it will add to the growing number of positive factors helping boost the property industry – including the end of the AFL and NRL seasons.
The weekend’s figures also come just days after figures from RP Data showed prices increased by 1.2% in September across the capital cities, fuelling more hope of a positive spring selling season.
“I think there has been some evidence now, consistent evidence, that clearance rates are higher than at this same time last year,” SQM Research managing director Louis Christopher told SmartCompany this morning.
According to the Real Estate Institute of Victoria, the city of Melbourne recorded a clearance rate of 66%, compared to 51% during the same weekend last year.
Even more encouraging are the number of listings.
“The month of October features a significant increase in the volume of auctions, with 3,070 expected to be held, compared to 2,368 in September,” said REIV chief executive Enzo Raimondo.
“This will provide buyers with more choice and continuing good buying opportunities, especially as interest rates have been reduced and prices remain below their peak.”
There were 497 auctions, with 330 selling. Given the end of the football season, the REIV expects 680 auctions next weekend.
AMP said Sydney recorded a clearance rate of 63.1%, compared to 53% at the same time last year.
Christopher says the figures are encouraging – and another rate cut before Christmas would do even more to give the property market a much-needed boost.
Last week, ANZ said the RBA would do well to make another rate cut before the end of the year to prop up a sluggish economy, while CommSec also pencilled in another rate cut for November.
“I think it’d be interesting to see another rate cut before Christmas,” Christopher says.
While the effects of the rate cut won’t be seen for a few weeks, Christopher says it will likely have a good effect on the property market – and another would do the same.
“The rate cut also plays into our bullish forecast for the next year,” he says, referencing figures that suggest a 7% increase by 2013 if conditions improve.