Auction clearances in Sydney and Melbourne continued to ride high on the weekend following a solid start to the selling year last week.
The news comes amid expert warnings of a potential property bust, if banks keep loaning increasing sums of money at low interest rates.
In Sydney 84.4% of properties that went to auction were sold, while in Melbourne the clearance rate was 75.6%.
The average price for houses sold by auction in Sydney was $970,000, up from $835,000 for the same weekend last year. For Sydney units, the average median price was $672,500, up from $622,000 last year.
The most expensive auction sale in Sydney was a four bedroom home in Strathfield at $2.28 million, while the most affordable was a two bedroom unit in Auburn, selling at auction for $400,000.
Australian Property Monitors senior economist Andrew Wilson told SmartCompany that in Sydney, it was the second week in a row of solid clearance rates, however last week there were small numbers of properties on the market.
“We need some more auction results to get a true sense of what is to happen…it is no surprise that the energy from last year is continuing into this year, at a higher level than where the market ended (in 2013),” he says.
He says as the property year warms up, the higher priced properties in the more exclusive areas will start to appear on the market, giving a better indication of the sorts of average median sales figures likely to dominate this year.
“We have anecdotal evidence to say that the sales in Sydney were above the reserves set,” he says.
In Melbourne, the average median house price was $695,000, up from $576,250 for the same weekend in 2013, while the average price for units sold at auctions was $430,000, up from $456,000 last year.
The most expensive auction in Melbourne was a three bedroom house in Elsternwick, selling for $1.22 million. The cheapest was a one bedroom apartment in Richmond, at $282,200.
Wilson says while the figures look solid for Melbourne, more time is needed to get a reliable indication of the trends. He says Melbourne’s outer east belt is proving a hot spot, with a strong clearance rate on the weekend, while the inner east was also performing well.
He expects to see a greater flood of properties on the Melbourne auction market throughout February as people try to get in before the Labour Day long weekend.
“With bank mortgage rates heading downwards and banks getting more competitive, there is more incentive for buyers,” he says.
However he warns with more job losses at factories in Victoria, confidence to borrow may wane as people become more concerned about their job security.
In Brisbane, where there are fewer auctions, the clearance rate was 57.7%, with the median house price at $626,000, up from $446,000 for the same weekend in 2013.