Spring Selling Season Gains Momentum

Clearance rates across the major markets of Sydney and Melbourne have picked up momentum amid a surge in auction listings as the traditional spring selling season gains pace.

Nationally the clearance rate was 77 per cent, on preliminary figures from data provider Corelogic after last week’s final clearance rate dropped to 67.6 per cent, due in part to the NRL grand final and long weekend.

There were 2,017 homes taken to auction across the combined capital cities this week, up from 1,324 over the previous week.

Sydney was at 82.3 per cent and Melbourne at 76.6 per cent with volumes more than doubling to 729 over the week to Saturday from 317 the week prior when the final clearance rate was 79.8 per cent and 73.8 per cent respectively.

Brisbane only had a preliminary figure of 59 per cent while Perth saw 42 per cent. Canberra's preliminary rate improved to 78.4 per cent.

Corelogic Auction Results

During the downturn that lasted almost two years, property prices fell about 15 per cent in Sydney and 11 per cent in Melbourne.

Since then, access to cheap money combined with house hunters competing over limited stock have helped drive prices higher, by about 3.2 per cent in Sydney and 3.4 per cent in Melbourne in the past four months, Corelogic's monthly price index is expected to show on Tuesday.

The market has also been buoyed by the Reserve Bank of Australia's interest rate cuts, lowering to 0.75 per cent.

The rate cut has attempted to stimulate the housing market as borrowers' loan capacity is increased and the amount of interest expense for existing borrowers falls.

Recent ABS figures has revealed both investor and first-home buyers stepping back into the mortgage market over August, pushing new lending, including refinancing, up 4.5 per cent in August to $27.9 billion.

The number of new listings added to the combined capital housing markets has seen a 44 per cent rise from the depths of the winter slowdown in early July through to the first week of October, however that hasn’t been enough to push fresh listing numbers in line with previous years.

While volumes have been steadily ticking up over the past month they are still down on the previous year.

The number of new capital city listings over the past twenty eight days is tracking at the lowest level for this time of the year since Corelogic started tracking real estate listings in 2007.

Corelogic's Tim Lawless also expects demand to keep growing, albeit relatively slowly.

“With market activity rising, active buyers are becoming more competitive across a shallow pool of listings which is adding some urgency to the market,” he said.

“With increased competition, vendors are regaining some of the leverage they lost through the housing downturn and buyers could be feeling the first pangs of FOMO as they see properties selling faster and prices rising.”

Over the three months to September 2019, the clearance rate across the combined capital cities came in at 69.9 per cent across 16,730 auctions, the strongest quarterly clearance rate seen since the June 2017 quarter to 71.7 per cent.

Over the September 2018 quarter, 20,653 homes were taken to auction, although the clearance rate was much lower at 53.6 per cent.

“The September quarter has seen a remarkable lift in auction clearance rates, driven by consistently high results across the largest auction markets, Sydney and Melbourne,” Lawless said.

“There is a strong likelihood that advertised stock levels and the number of scheduled auctions will progressively rise as spring progresses and vendor confidence lifts on healthier housing market conditions.”