Summer Is Over But Things Are Still Hot
Released March 17 2015
Auction clearance rates for Sydney and Melbourne remain strong and there are signs of price growth in the market. Brisbane is sending mixed messages to the market and to investors.
Auction clearance rates report the number of properties sold compared to the number of properties offered up for auction. A figure of 80% and above indicates a strong performance. The real estate industry aims for 70%.
Auction Clearance Rates
Source – CorelogicRPData
Sydney and Melbourne have bested their performances from last week and have driven overall clearance rates to a six year high. This ongoing result is feeding into housing prices. Strong auction results have seen sales up to $1million above reserve in Melbourne! Brisbane showed a significant jump in its clearance rate but that was on the back of a significant drop in supply.
What It Means for Investors
Autumn is a time of preparation for the winter hibernation for some animal species. For them, the season is characterised by a flurry of activity. The real estate market is kind of like that too. Sellers prefer to have their property transactions completed by winter and this leads to an active time on the real estate market. Results in Sydney and Melbourne fit this pattern. The good news is that clearance rates are remaining high even with the increased seasonal supply to the market. This shows that demand is strong and that property prices are underpinned by strong market fundamentals.
The Brisbane market however is still one to be wary of. Clearance rates did show a strong improvement that had some real estate insider’s spruiking the market. However, this result was on the back of a drop in supply by half. When you add in the inherent political instability of a new minority state government, and a drop in both consumer and business confidence, there are good reasons to wait and see where things are headed.