For the third successive week, Sydney auctions have again stood up to weak market conditions, recording a preliminary clearance rate of 84.7 per cent — the strongest result in more than two years and marked improvement from 53 per cent a year earlier.
Only 58 properties of the 500 auctions in Sydney last week are still on the market, after huge crowds turned up to auctions across the city recording a result last reached in February 2017, according to Corelogic data.
While final clearance figures will likely be revised lower and volumes remain soft, the weekends results makes it three successive weeks where better than three-quarters of properties on the block sold with the strength of the market recovery set to be tested when stock volumes rise again in spring.
Low stock numbers — well below what they were in 2017, when clearance rates were last this high — are now driving buyers back into the market.
Houses in Melbourne reached $875,000, significantly lower than Sydney, coming in at $1.3 million, leading to a stronger push for units from Sydney buyers.
The median price for units in Melbourne reached $668,750, while in Sydney it reached $825,000.
In Melbourne, with clearance rates just below 80 per cent this week, volumes were down 16 per cent from this time last year. Across 665 auctions, Melbourne had a clearance of 79.7 per cent.
Clearance rates across Brisbane’s 94 auctions jumped from just above 40 per cent in the same week last year, to 67.7 per cent in the last week.
Brisbane saw lower auction volumes week-on-week while Adelaide, Canberra and Perth saw an increase in the number of homes taken to auction over the week.
Conditions have been increasingly optimistic for buyers, with two interest rate cuts as well as a sense that banks are now loosening serviceability measures instilled by regulator APRA.
Corelogic auction market commentator Kevin Brogan said that any pricing increases over the foreseeable future will be gradual despite the uptick in foot traffic on auction days.
“If we do see a surge of listings — when the expected listings for spring comes along — will that be sufficient to exert a downward influence on clearance rates? Is that going to exert a downward pressure on the clearance rates? That's the question,” Brogan told The Urban Developer.
“If there is latent demand, it is difficult to tell how many buyers are out there who are getting their finances in order in anticipation of having more choice in spring.
“Despite the softening of house prices, especially in Sydney over a fifteen month period, there are still affordability constraints at play in the market.”
|Clearance rate||Total auctions||Results||Cleared||Uncleared|
^ Preliminary results. Source: Corelogic.
Westpac, in its August Housing Pulse monitor, points out there are still evidence to the argument there's a sustainable lift in demand.
“The lift in buyer sentiment looks to be partly based on the expectation of a further improvement in affordability that may not materialise if prices start rising again or if the RBA disappoints on expected rate cuts,” Westpac noted.
“Conditions continue to vary markedly by state. New South Wales and Victoria are showing a clear turnaround, Queensland's still looks out of sorts, South Australia is drifting and Western Australia is struggling to establish a base despite renewed optimism.”
This week's results are likely to be revised down when final figures come in, but it's still a considerable jump on figures gathered from the same time last year.
Separate figures from Domain put the national preliminary clearance rate at 78.4 per cent, up from 69 per cent a week earlier, with Sydney at 78.2 per cent and Melbourne at 81.2 per cent.