The 2020 Auction season continued on a strong note in both Sydney and Melbourne this weekend.
Despite considerably more properties being put up for sale by auction clearance rates improved as the following graphic clearly shows
Auction clearance results in Melbourne, Sydney, Brisbane, Canberra and Adelaide all improved compared to last week.
Sydney produced a very strong performance recording a preliminary clearance rate of 84.4%.
Melbourne auction clearance results were a little lower, but still a very respectable 76.6%.
This reflects what our teams at Metropole’s offices in Melbourne, Sydney and Brisbane are finding on the ground – increased buyer enquiry and strong general interest in our housing markets because of the expectation of continual rising prices, despite the obvious concern about the bushfires, corona virus and overseas geopolitical issues.
Here are the auction clearance rates as reported by Domain
The preliminary auction clearance rate for Melbourne as reported by Domain today was a strong 76.6% with 649 properties put to auction, considerably more than the 381 properties put to auction last weekend.
So far only 475 results have been reported and 13 properties were withdrawn from sale, meaning the final clearance rate is likely to drop to around 70%, which will be higher than last weekend’s final auction clearance rate of 66.6%.
Realestate.com.au reported that there were also 935 private sales in Melbourne this week – up from 821 last week.
A year ago in 2019 the auction clearance rate was 49.7% and 531 properties were listed for sale by auction.
By contrast, this weekend in 2018 1,225 properties were auctioned and 63% sold.
Sydney real estate auction results
The preliminary auction clearance rate for Sydney as reported by Domain today was a very strong 84.4% with 506 properties put to auction, considerably more than the 402 properties put to auction last weekend.
So far 330 results were reported and 22 properties were withdrawn from sale, meaning the final clearance rate is likely to drop to around 78 -80 %, which will be higher than last weekend’s final auction clearance rate of 77%.
Realestate.com.au reported that there were also 1,226 private sales in Sydney this week, much the same as the 1,241 private sales reported last week.
A year ago in 2019 the auction clearance rate was 54.1 % on 427 auction listings.
By contrast, this weekend in 2018 446 properties were auctioned and 59.6% sold.
Both Melbourne and Sydney home auction markets started the year strongly and the depth of interest from home buyers and investors has kept auction results strong despite more properties being put up for sale. .
Buyer and now seller confidence has clearly regenerated with results continuing to track well above those recorded a year ago.
There is no mistaking it – there is a lot of energy in the markets of our 3 big capital cities and Canberra and this should continue throughout the year.
Buyers are back with a little FOMO (Fear Of Missing OUT) now that the media keeps reporting that dwelling values in Sydney and Melbourne have surged and are likely to hit new peaks in the next few months.
These trends reflect what our teams at Metropole’s offices in Melbourne and Sydney are finding on the ground – increased buyer enquiry and general interest in our housing markets because of the expectation of rising prices.
The following graph from the ANZ bank shows how in previous cycles rising dwelling prices followed on from rising auction clearance rates, however tighter credit and soft economic conditions will constrain property price growth once Melbourne and Sydney regain their lost ground.
The 3 interest rate cuts last year and another one or two rate cuts likely this year means the markets will continue to strengthen.
See the graph from ANZ below which shows how interest rate cuts (red squares) led to rising property values in previous cycles.
If cheaper mortgage rates lead to rising property values, this will create a policy dilemma for the RBA which doesn’t really want this to occur, but clearly its focus is on jobs creation.