The Party Continues

Date: 03/05/2016

Results for week ending May 1.

The combined capital city clearance rate strengthened again this week, rising to 71.3 percent, even after a notable spike in seller activity.

The Stats

Melbourne was by far the most active city with 1,408 auctions. This number is significantly higher than the city’s average weekly auction volume of around 900 listings. Buyers rose to the challenge, with 74.2 percent of auctions finding successful bidders. That’s an increase of nearly three points.

Sydney buyers offered up a clearance rate of 74.1 percent this week, over three points lower than last week. Falling short of Melbourne’s robust volume, Sydney sellers still brought 799 homes to auction, up from last week’s final tally of 643.

Adelaide, Brisbane and Perth all likewise saw notable improvements in buyer activity.

The Graph

The Numbers

	Sydney	Melbourne	Brisbane	Adelaide	Perth	Tasmania	Canberra
Clearance Rate	74.1%	74.2%	49.5%	64.4%	46.4%	42.9%	67.7%
Auctions	799	1408	167	129	43	10	*

The Analysis

Melbourne’s high sales volume can most likely be attributed to a backlog of sellers after the ANZAC long weekend. Apparently there was a backlog of buyers as well. With a significant spike in the clearance rate on such a high number of listings, we can clearly see that the prevailing sentiment in Victoria is one of optimism.

Likewise, there’s no sign of a decrease in demand in Sydney. The clearance rate may have dropped three points, but with more homes on offer, the number of buyers in the market appears to be consistent with recent weeks.

What It Means For Investors

How long will the party continue?

In light of the RBA’s 25 basis point rate cut today, it’s hard to see any end in sight. Last week’s soft inflation data and a resilient Aussie dollar finally put Glenn Stevens in an easing mood.

The market was a little surprised, and the Aussie took a steep dive as you can see:

One minute it was trading at .7710.

Within seconds it had dropped to under .7580.

The all-important question for investors is whether the banks will pass along all or any of their interest savings to borrowers. With ANZ and Westpac both announcing lower than expected profits, they may very well decide to pass all their savings on to shareholders instead.

For the historical data of weekly auction clearance rates, click here.

By Jason Staggers

Jason was a personal mentor working with Steve McKnight's Property Apprentices. He helped hundreds of investors apply Steve's teachings in the real world and achieve greater results on their journey to financial freedom. Jason now lives in Perth, WA where he leads Neuma Church.