As the final round of properties for the year go under the hammer this weekend, RP Data figures show more people have sold more homes at auction this year than in 2013.
While the market has cooled in the latter half of 2014, the capital city clearance rate will exceed last year, currently sitting at 68% with one week to go, compared to 66.2% last year. RP Data shows the clearance rate has risen in each capital city, with the exception of Melbourne and Perth.
It was forecast the market would show a little bit of sanity this year compared to the strength of 2013 and it certainly has shown more moderate growth, says RP Data housing market specialist Robert Larocca.
“It has certainly been a good year,” says Larocca. “The high volumes are proof the market is going strongly and there has been a shift in sales method towards auctions.”
Larocca says different auction markets have performed differently throughout the country, with the most notable contrast between Australia’s two biggest auction cities.
“Sydney led the pack and produced the best results with an unprecedented rise in auction volumes,” he says.
“In retrospect, I think 2014 will be the year that Sydney caught up with Melbourne.”
Larocca says the raw numbers show Sydney now lists around the same number of auctions as Melbourne, where it used to list closer to half.
“It will be interesting to see in the next couple of years if there is a fundamental shift, or if the market was just strong this year and auctions were trendy,” he says.
Sydney notched a clearance rate of 71.2% on 1259 auctions at the weekend, compared to 72.2% last year. The overall clearance rate for the year will likely be close to 74.5%, according to Larocca, higher than the 72.7% recorded last year.
Larocca says while the Melbourne market has softened in recent months, that is characteristic for this time of year.
“It’s typical of a market that is performing quite moderately,” he says.
Melbourne logged a 65.9% clearance on 1,535 homes this weekend, compared to 64.9% this time last year. Larocca says the clearance rate for 2014 is likely to be marginally lower at around 68.6%, compared to 69.2% in 2013.
The overall clearance rate for Brisbane in 2014 is likely to be 45.8%, higher than 41.5% last year, while Adelaide will sit at 62%, higher than 56.5% last year.
Perth has dropped to 41.2% for 2014, lower than 46.5 % last year.
Looking forward to 2015, Larocca says much will hinge on overall economic conditions, suck as economic growth, unemployment figures and the Reserve Bank of Australia’s move on interest rates.
“We probably shouldn’t be hoping for more cuts,” he says.
“They may provide a short-term boost and make people feel good, feel as though they are paying less, but it shows the Reserve Bank is saying there are problems with the economy. The property market has performed well with higher rates in the past.”
Larocca forecasts slightly more subdued clearance rates for the start of 2015, expecting major capital cities to drop to the mid-60s.
“I think there will be a reduction in overall auctions numbers too, we won’t see the sustained growth we saw this year, reflecting the strength of the market has toned down as the year goes on,” he says.
“Overall, I think the market will be standing still until we see some stronger, positive economic signs.”