Can the auction highs continue?
Will the Queen’s Birthday weekend signal a turnaround in auction fortunes?
Last weekend auction clearance rates were strong around much of the country.
Sydney finished up at 78 per cent, Melbourne 71.8 per cent (against 56 per cent on the equivalent weekend last year) and even sleepy old Adelaide managed 70 per cent. Brisbane didn’t fare so well with 45 per cent, although it is generally higher than the sunshine state’s capital has managed in recent months.
Andrew Wilson, senior economist for the Fairfax Media-owned Australian Property Monitors, doesn’t think this coming weekend – traditionally a turning point in the market as buyers head indoors for winter – will bring the cooling effect it normally does.
In commentary on Melbourne, Dr Wilson writes: “With Melbourne recording its best autumn auction results in years, the market pauses briefly next weekend for the Queen's Birthday holiday, which signals the start of the normally quieter winter selling season.
“But rising buyer momentum and inevitable price growth is set to continue, particularly if the Reserve Bank makes an unexpected cut to interest rates again this week.”
That cut did not eventuate with the Reserve Bank deciding to keep rates on hold at its Tuesday meeting.
In Sydney, seasoned inner west agent Pog Ling Ee, is expecting clearance rates to slow over winter. Already she’s seeing a change.
“May was absolutely crazy,” Poh Ling says.
“I’ve got a couple of auctions in June. I don’t feel that craziness as much. There’s still a lot of buyers but nowhere near May – they were unbelievable. [I was giving out] 30-something contracts [per auction].”
Two factors could push clearance rates down, Poh Ling says – over-inflated expectations from vendors and an increase in stock levels.
“I think the clearance rate will probably still be ok as long as the owners don't think the prices will be the same as May. If the owners are still grounded, there are still plenty of buyers out there,” Poh Ling says.
She’s predicting an increase in the number of properties for sale as long-time investors move to cash in on the market change.
“In May there was no stock at all, hardly any stock. So if more comes on, the buyers will still be the same but they’ll have more to choose from,” says Poh Ling.
Another Sydney agent, BresicWhitney director Ivan Bresic, who sells in the city’s east and inner west, predicts auction clearance rates will remain high for the rest of the year.
“You’ve got to ask yourself ‘why do we have such a such a high auction clearance rate right now’? he says.
“There’s two main factors: Record low interest rates and low listing levels.
“We are now moving towards the second half of the year [and] … there’s no indication that stock levels are going to rise and there’s no indication that interest rates are going to rise.
“Whilst those two remain low we suspect that auction clearance rates, certainly for the remainder of this year, will remain high.”