The property market has continued its strong year with another weekend of high auction clearance rates, and the lower Australian dollar could make it even stronger.
Experts say the plummeting currency could actually start encouraging more foreign investors to spend their money in Australia.
“This goes both ways,” says SQM Research managing director Louis Christopher. “You see existing property investors being hurt by the lower dollar because it means they’re getting less of their local currency coming back.
“That being said, when we see a falling dollar, housing becomes cheaper for those who are considering entering the local market and it means they’re getting a better price.”
The dollar has continued its fall, opening this morning above US96 cents. New reports indicate the dollar could hit as low as US85 cents within the next year, according to Fairfax. Many economists have expected this fall to eventuate as the American economy improves.
But as Christopher explains, the lower dollar attracts property investment to certain areas.
“The falling dollar is good for the local economy, and therefore it becomes good for the local housing market,” he says. “We’ll see more international tourism, and less domestic tourists who head overseas.”
Meanwhile, the property market has continued its streak of solid auctions results.
The Real Estate Institute of Victoria (REIV) reported Melbourne recorded a clearance rate of 71% over the weekend, compared to the same result last weekend and 60% the same time last year.
“Strong clearance rates continue to be recorded in the inner east, south eastern and Bayside suburbs this year as competition among bidders increases in some of Melbourne’s million-dollar suburbs,” REIV chief executive Enzo Raimondo said in a statement.
There were 665 auctions reported, with 473 sold.
In Sydney, the city recorded a clearance rate of 76.5%, based on 286 reported auctions and 237 sales. The figure compared to 54% recorded during the same time last year.
Both results continue the strong series of clearance rates recorded during 2013, alongside positive sales price data from RP Data and the Australian Bureau of Statistics.
Christopher says he believes the market is in a state of “modest recovery”.
“Overall, the market is in a recovery. In some cases it’s a little quicker than modest, but house price growth has been difficult to measure because the reporting bodies have been varied.
“However, our opinion is that we’re still on the recovery path.”
Christopher says while the Melbourne and Sydney markets have remained positive, Canberra is struggling.
“The market is hurting there, and Darwin… while fairly strong, we think is sensitive to a downturn.”