The property market may have suffered a terrible year but recent auction and price results indicate the market is on its way up.
And with economists and analysts alike expecting a rate cut before the end of the year, things are looking good for budding property investors.
The weekend saw both Melbourne and Sydney record higher than usual auction clearance rates – both of which were higher than the corresponding weekends in 2011.
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And the most recent daily figures from RP Data, taken yesterday, show prices in the five capital cities have increased 1.99% over the last quarter. In Melbourne specifically, prices have increased by 3.1% and in Sydney by 2.4%.
The only market to record a drop in the last quarter was Brisbane, down by only 0.13%.
The property market in Melbourne never fully recovers until after the AFL Grand Final, which is being played this coming Saturday. As a result, many auctions have been brought forward, with the city recording 624 auctions on the weekend.
The city reached a clearance rate of 64%, compared to 52% for the same weekend last year.
“In light of the increase in stock this weekend, this is quite a healthy result. It continues the trend this spring with the clearance rate being consistently a few points higher than last year,” chief executive Enzo Raimondo said in a statement.
“Due to the AFL Grand Final there will only be about 20 auctions held next Saturday, all of which are scheduled for noon or earlier. Due to this very low number a clearance rate will not be published.”
The results were similar in Sydney. The city recorded 504 auctions with a clearance rate of 67.3%, compared to 56% both last week and in 2011.
SQM Research managing director Louis Christopher says even when the unreported auctions are taken into account, the clearance rates still improve on last year.
“Definitely the performance on the weekend was reflecting the fact we had a significantly higher number of auctions.”
“Even if you take into account the worst case scenario with these unreported auctions, it still means the clearance rates are higher. So it’s a fairly strong result, and even when you’re taking everything into account.”
Economists also expect a rate cut – or two – before Christmas. Christopher says even one would give the early positive signs a much-needed boost.
“We can’t read too much into one weekend. But, that said, this is now the fourth or fifth week now where we’ve had clearance rates higher than this time last year. That’s a signal there’s a trend there.”
“If we see another rate cut before Christmas time that would add more fuel there. But it’s looking pretty positive.”