The property market iomproved slightly over the weekend with a boost in the number of properties up for action, but clearance rates still remain unseasonably low and higher interest rates have scared away first home buyers.
The downbeat start to the year comes as first home buyers are remaining hesitant after the major banks increased interest rates independently of the RBA.
According to the Real Estate Institute of Victoria, the city recorded a clearance rate of 59%, compared to 64% last week, with a total of 579 properties on the market, up from 303 last week. This time last year, there were 749.
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According to Australian Property Monitors, Sydney recorded a 53.9% rate with 340 auctions, while Adelaide and Brisbane recorded clearance rates of 21.1% and 30.4% respectively.
SQM Research managing director Louis Christopher told SmartCompany this morning the results are weaker than they should be.
“That’s a pretty weak level for this time of year, in a normal market you’d get clearance rates around the 60s.We’ve had rates in the higher 50s, and then of course the banks lifted rates, so that’s hurt things as well.”
“This is not strong, and from my memory is weaker than what we had last year.”
Christopher suggests that if rates stay at these levels, his research house may need to revisit its forecasts.
“Towards the end of last year we were becoming a little bullish. In Melbourne we were less bullish, but it’s been a little bit surprising.”
The downturn in auctions is due to two major factors, he argues. The first is that in New South Wales, stamp duty concessions have been scrapped, and the second is the decoupling of the RBA’s movements to the major banks.
Seeing the major banks raise rates independently, despite no movement from the RBA, is a move that will keep sentiment down and discourage home buying, Christopher says.
“I think this has made a severe dent in the market, in terms of confidence. It’s created a lot of uncertainty,” he says.
“There weren’t as many home buyers this week and personally I think that’s because of the banks lifting their rates. It’s all about the perception that the banks…can do whatever they want?”
Christopher says that fear will creep over the market for some time, as prospective home buyers take to guessing what the major banks will do, even if the RBA makes no move at all.
“There is definitely a fear of what these guys can do next.”