A further fall in the auction clearance rate over the weekend came with a silver lining for home owners – it could help prevent a rise in interest rates tomorrow.
The Easter auction break failed to reinvigorate Melbourne home buyers, with auction clearance rates there tumbling 4% to 63%, according to Real Estate Institute of Victoria figures.
The fall is particularly significant given that there were many fewer properties for sale than before Easter, with the number of properties on the block falling from 1146 two weeks ago to 660 on the weekend.
Sydney auction clearance rates continued their slow decline, with 51% of 294 properties selling, down from 52% before Easter, according to Australian Property Monitors.
Home sellers in Adelaide also faired poorly, the 54% auction clearance rate down from 70% two weekends ago – although with only 35 properties auctioned, the clearance figure there is susceptible to wide swings.
Brisbane was the only capital city in which auction clearance rates went up, but it was form a very low base – 31% of 34 properties sold, up from a measly 24% before Easter.
But while the poor auction results may be bad news for home sellers, they contribute to growing evidence that the Reserve Bank of Australia’s campaign against inflation is beginning to bite.
The market consensus is that the RBA will be deterred from lifting interest rates when it meets tomorrow by recent data showing declining retail sales, business and consumer confidence and job vacancies.
Falling auction clearance rates, although not a measure directly connected to inflation, help to reinforce the picture of consumer sentiment softened by successive interest rate rises.
But that doesn’t mean that we have seen the last of interest rates rises from the RBA – the next CPI figure, due in late April, is seen as the next likely trigger for a rate rise if it shows inflationary pressures are persisting at high rates.
A TD Securities/Melbourne Institute measure of inflationary pressures released today shows that that may be the case, with its crucial trimmed mean measure of inflation up 0.6% for March to an annual rate of 3.8%, well above the RBA’s 2% to 3% target band.