The property market has gotten off to a weak start, with auction clearance rates coming in lower when compared to the same time last year and some experts suggesting consumers will become more cautious after the Reserve Bank kept rates on hold last week.
However, new figures from property research group Residex show housing values only fell by 1.21% in January, with chief executive John Edwards suggesting the market is now at a “tipping point”.
“The next few months will be crucial in determining where markets lead,” he said in a statement.
That came after the company released data showing the median house value fell 1.21% in January, with the median unit price down 0.67%.
“The property market is on a knife-edge. A rate cut would have had an important impact on affordability and boosting confidence.”
“Our data suggests we are moving beyond the bottom of the cycle, however the trend is not pronounced,” he said.
SQM Research managing director Louis Christopher agrees, lamenting the market can be “a fickle thing”.
“What happened on Friday is enough to change sentiment. It’s only one weekend, but don’t count out the possibility of the RBA factoring this into their next meeting.”
“You could see it counter it fairly aggressively.”
Last week, although the Reserve Bank did not increase interest rates, both ANZ and Westpac increased rates for mortgages and small businesses. Christopher says this will have battered consume confidence, which was already weak.
“It’s not good for confidence. Buyers simply don’t know what they’re going to do next, and the RBA is being perceived as losing its authority.”
However, he does say this was “just one week”, and notes that during the end of 2011 the company recorded the beginning of a recovery.
According to Australian Property Monitors, clearance rates in Sydney were at 53%, with 141 reported auctions. But during the same week last year, the city recorded a rate of 61.9% with 232 reported auctions out of 200 listed.
Both Brisbane and Adelaide recorded clearance rates of 50%, while last year the cities recorded rates of 45% and 14.3%, respectively.
According to the Real Estate Institute of Victoria, Melbourne recorded a clearance rate of 66% with 276 auctions – up slightly from last year’s 63%, although the number of listings has declined from 424 to 276.
Christopher says the results don’t bode well for the overall market.
“The clearance rates are lower than last year, and even that was a weak market at the time,” he told SmartCompany.
“I believe what we’ve seen here is a knee-jerk reaction by buyers, scared off by what the major banks have done on Friday.”