The housing recovery is gaining momentum as buyers, buoyed by better borrowing conditions, stake their claim in a smaller pool of homes on the market.
With fewer properties on the market, buyers’ appetite pushed the preliminary clearance rate in Sydney to 78.2 per cent from the 552 auctions listed, on CoreLogic figures. In Melbourne, the preliminary clearance rate hit 70.3 per cent across 388 auctions.
Buyers agent Amy Mylius and happy first home buyers Ali Zahiri and Leila Ramezani. supplied
Nationally, there were fewer homes taken to auction because of school holidays being underway in most states and mid-winter listings typically lower. The 945 auctions listed for capital city markets around the country returned a preliminary auction clearance rate of 68.9 per cent, the fourth week in a row that clearances jumped above 60 per cent.
SQM Research’s Louis Christopher said most recoveries he’d observed since 2001 had grown from a low volume market.
“I’m not in the camp that thinks this a bogus recovery because it is based on low volumes so far,” he said.
“It is a real recovery. The reason why we’re seeing the pick up in clearance rates is that there are more buyers out there due to cuts in interest rates, the surprise Coalition [federal election] win and the loosening of credit restrictions by APRA.
“All this is enough to boost the property market. It’s created a trigger for a turnaround ”
In Melbourne, construction industry project manager Ali Zahiri and his partner Leila Ramezani, who is in the finance sector, have been looking since last year but in the last few weeks have they seen the market clearly turn and girded themselves to push harder at auctions.
“The last three weeks it’s been crazy how people at auctions have tried to compete and bid. Obviously when bidders are fighting for it, the prices are going up,” Mr Zahiri told The Australian Financial Review.
‘We have spirited bidding again’
Advised by buyer’s agent Amy Mylius from Cate Bakos Property, the couple bought their first home at South Morang in suburban Melbourne for $680,000 after Saturday’s auction took it above reserve.
“FOMO, the fear of missing out, is really kicking in because people are feeling like ‘the bottom has now passed, I need to give this a really good go if I want to buy in this market,” Ms Bakos said.
The rebound is also in evidence in Sydney where the four-bedroom home 61 Hinkler Crescent in Lane Cove sold above reserve at $2.27 million.
“Buyers are certainly more confident and happy to put their hand up at auction,” said selling agent Debbie Jepson of Belle Property Lane Cove. “Suddenly, we have spirited bidding again.”
The most recent house prices figures show price growth in Sydney and Melbourne is in positive territory for the first time since the market peaked in 2017. Values grew slightly by 0.2 per cent in Melbourne and 0.1 per cent in Sydney over the month of June, on CoreLogic figures.
In the past week, there as been yet more stimulus in the market, with a second consecutive rate cut, the passage of the federal government’s $158 billion tax plan and the scrapping the 7 per cent serviceability floor on borrowers, a move that is expected to increase borrowing capacity by up to 14 per cent.
AMP Capital’s chief economist Shane Oliver said the May election result was the catalyst for many investors, while the tax cuts and removal of the serviceability buffer would boost sentiment even if their effects were yet to flow through.
Mr Oliver said weekly auction clearance rates were one of the most timely guides to the state of the market and showed the impact of recent positive news, notwithstanding the fact that volumes are still low.
“The fact that clearance rates have moved up from 45 per cent last last year to now around the mid 60 per cent range, that is suggesting house price momentum will start to improve.
“Whether they will take off again to the same degree as they have in the past is a different matter. I tend to think they probably won’t.”