Clearance rates in Sydney are continuing to reach record highs, with more than 80% of homes up for grabs consistently selling each weekend.
On Saturday, 82.4% of properties sold at auction in Sydney, according to the latest figures from Australian Property Monitors.
APM senior economist Andrew Wilson told SmartCompany last year’s momentum is continuing to prevail in 2014 and there are no signs the market is slowing.
“Sydney is tracking around those low 80% numbers, even though we’re getting considerably high listing numbers for this time of the year,” he says.
“It’s a strong market in Sydney. There had been a feeling some of the budget markets like Canterbury, Bankstown and the west and south-western suburbs were falling off the pace, but even they had some reasonable clearance rates in the 80% range again.”
In 2013, the prestige market in Sydney lagged behind the rest of the market. However, this trend seems to have been reversed, with premium suburbs now also recording high clearance rates.
“Even though the bottom end had been waning a little bit, the top end has been picking up,” Wilson says.
“This market was quiet a year ago, but prestige property is back in town and there have been higher numbers of prestige properties on the market. There is a sense the prestige market has now taken on the energy the market’s had for the past 12 months.”
Over the past four weeks, Sydney has seen auction listing numbers consistently above 600.
“There are really no dark clouds on the horizon, which appeared to be gathering at the end of last year. Economic factors like retail sales and construction figures are on the up and low interest rates are one of the key drivers of the market,” Wilson says.
But Wilson says despite this some cracks could be starting to show in Sydney’s rental market.
“We’re starting to track a sense that vacancy rates are rising, which could be a concern for some investors, and rents have been flat now for some time. This could signal some concerns about the viability of the rental market,” he says.
In Melbourne, there were lower listing numbers than usual due to the Labour Day long weekend. However, out of the 227 properties listed for sale, 70.1% sold; an increase of almost 10% on this time last year.
“In Melbourne it was a holiday weekend, but it still had a reasonable clearance rate and listings were also up compared to this time last year,” Wilson says.
“The market is tracking a little higher than this time last year, with inner bayside suburbs particularly strong. We’re expecting a big weekend this week.”
Wilson says the strength of the Sydney and Melbourne markets is evidence of the effectiveness of low interest rates.
“The Melbourne market has passed every test which has been thrown at it so far… it shows what low interest rates can do,” Wilson says.
Brisbane, which has been tipped as the hot spot for property investors in 2014, recorded a clearance rate of 59.5% and 105 properties were listed for the weekend.
However, Wilson says this isn’t an accurate reflection of the market.
“In general terms there is a sense in the Brisbane market it’s picking up. It’s still below its previous price peak but expect to regain record level prices sometimes this year,” he says.
“Investors and the middle market are very active.”