The property market has enjoyed yet another week of solid sales, with auction clearance rates and property listings remaining high in both Sydney and Melbourne.
And while the sustained market activity has led some sellers to question when they will be seeing more intense financial gains, SQM Research managing director Louis Christopher says the current recovery will be much more sustainable than the last.
Properties are set to gain value over the next year, he says, but at a slower rate than the previous recovery.
“We’ve already seen prices have been increasing, but just not at the rate of knots we had in the last recovery in 2009,” he says.
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“That was really quite a surge, and the difference between then and now is the interest rates. We have generally low interest rates right now.”
The latest results show Sydney recorded a higher clearance rate this weekend at 69%, according to Australian Property Monitors, based on 314 auctions reported out of 465 listings.
In Melbourne, clearance rates were lower due to school holidays, although the city still claimed a clearance rate of 65% on 443 reported sales.
REIV chief executive Enzo Raimondo said in a statement the real impact on prices will be seen next week, when March quarter median prices will be released.
Louis Christopher says owners shouldn’t expect massive gains. The current market is missing two major factors from the last recovery which pushed prices upwards: high interest rates and a first home owners’ grant.
Christopher says as a result, we can expect price increases for some time but they will come in smaller increments.
“Stability is good,” he says. “It means this recovery will be more sustainable than just lasting 12 months, which is what happened in 2009.”
“Even taking into account the unreported auctions, what we’re seeing suggests we’re entering a market that is returning to normal. It’s not in a boom, but it’s not in a cold, either.”
The number of listings can be expected to decreases as winter grows closer, Christopher says, although clearance rates are expected to remain high.
“We expect the clearance rate to hold at these levels during autumn and winter,” he says.
“For first home buyers, there are still challenges because pricing is still relatively expensive. But this is still a reasonable climate for first home buyers. We’re not seeing a massive acceleration in prices – so if I was a first-time buyer I’d be researching.”