The east coast auctions market has held up even as overall activity picked up following several weeks weighed down by the Easter and and school holidays.
On preliminary results the national clearance rate hit 58.8 per cent across the combined capitals, up from last week’s final clearance rate of 50.4 per cent.
By contrast, this week last year the clearance rate was 62.1 per cent. The final clearance rate is expected to fall back to the low 50 per cent range once all results have been collected, on CoreLogic's view.
Significantly, the relative resilience that has emerged in the market in recent weeks was maintained even as 1472 homes went to auction, compared with 1026 in the previous week, which included Anzac Day and the final week of school holidays in some states.
In Melbourne, the preliminary auction clearance rate from 678 homes listed was 60.8 per cent, compared to 53.6 per cent over the previous week on a lower volume.
Sydney booked a a 66.6 per cent clearance rate from 535 auctions listed, although the proportion of results still unreported was higher, an indication that the final result could fall back further.
CoreLogic's Kevin Brogan said activity had picked but was yet to reach the levels seen in previous years and the May 18 federal election still weighed on sellers and buyers.
"We have seen a bounce back in activity but we're getting accustomed to the pattern that auction volumes are way down on where they were last year. In part that is due to market conditions but it is also impacted by the election coming up," he said.
Prices falling at a slower rate
CoreLogic's April house price figures showed a 0.7 per cent drop in Sydney, a fall of 0.6 per cent in Melbourne. Sydney property values have plummeted 14.5 per cent and Melbourne's values have dropped 10.9 per cent since they both peaked in 2017.
"In the context of the overall housing market we are actually seeing a reduced rate of value decline," Mr Brogan said. "We've seen the values coming off relatively rapidly for a year but it does look like that has slowed down a bit."
Given the slower rate of decline combined with anecdotal evidence of a little more mortgage activity, Mr Brogan said this week's auction results in Sydney and Melbourne were consistent in that the conditions of a housing downturn were moderating slightly.
In inner-city Sydney a two-bedroom terrace sold under the hammer for $1.175 million, $25,000 above reserve.
The buyers of are a young couple from Kirribilli who plan to live there while the vendor was an executive at Scentre Group, which controls Westfield malls.
Con Fotaras, who sold the property with colleague Nicholas Charles of Belle Property Surry Hills, said it was a good result given the uptick of properties coming onto the local market following the holidays.
11 Stirling Street in Redfern. Supplied
"I started in the area in 1996. I've always worked around Redfern and Surry Hills. The market was just too heated. It went up three times in an 18-month period. It was just too hard to price property.
"This property would have been a couple of hundred thousand dollars more two years ago, that's the reality. We couldn't price properly. Buyers were getting a bit scared. Now it's becoming a normal market."
'That's a sign of weakness'
SQM's Louis Christopher expects much busier weekends before and following the May 18 federal election and he also cautioned about the higher rate of unreported auctions so far this week.
"That's a sign of weakness," he said.
"I see the market as still falling as we speak. I attended a couple of auctions yesterday. There are buyers but there is a lot of uncertainty given property is a key issue in the election."
With all eyes now turned to the Reserve Bank meeting on Tuesday, Mr Christopher is expecting the RBA will be more inclined to hold rates steady in the hope that an easing in credit requirements would have a greater impact. including a lowering of the buffer, which requires new borrowers have the capacity to pay a 7.25 per cent interest rate.
"It doesn't make a lot of sense to have an interest rate buffer at 7.25 per cent. I think something more prudent would be around 6 per cent," he said.
The auctions market was well down in Brisbane with a clearance rate of 28.3 per cent from 90 listed auctions. Adelaide booked a 43.5 per cent clearance rate from 59 auctions.
Sourced by:
Nick Lenaghan | Property Editor | Financial Review
https://www.afr.com/real-estate/commercial/auctions-bounce-back-as-downturn-eases-20190505-p51k6z
May 5, 2019 — 1.09pm