It’s been a while since my last property market update. Due to the passing of my mother-in-law and an intense season in my business, my writing took a back seat. But I’m back now and plan to post these updates at least fortnightly, if not weekly.
- The number of auctions across the capital cities rose to its highest level in 2017.
- Melbourne sellers broke the record for the number of auctions held in the city.
- Auction clearance rates are slipping, giving more power back to buyers.
- In September, Sydney home prices fell for the first time in over a year. In October, the median house price in Sydney fell another half percent.
- Melbourne continues to show signs of relatively resilient demand.
The Latest Auction Activity
This week marked the busiest week for auctions all year, with vendors offering up a whopping 3,690 properties at auction. Melbourne led the way, breaking an all-time auction volume record, with 1,983 homes presented.
All the capital cities posted clearance rates sub-70 percent, with the exceptions of Melbourne and Canberra. The auction clearance rate in Sydney fell into the 50s for the first time in over a year.
Here are the latest results for our largest capital cities, followed by a breakdown of the sub-regions and key regional areas:
Recent Changes in House Prices
During September, Sydney prices fell for the first time in over a year. Melbourne prices, however, continued to climb. The same held true in October, with Sydney prices falling nearly a half percent.
Looking back over the rolling quarter and year, although Sydney home prices are in the red for the last three months, annual growth still sits at nearly 8 percent. Melbourne home prices have risen 11 percent over the past twelve months.
Auction volume this week was higher than even the pre-Easter figure back in April this year. Melbourne pulled most of that weight. Sellers there pulled forward auctions ahead of next week’s spring racing carnival festivities.
But Sydney also saw a significant rise in the number of homes auctions, showing that a primary reason for the increase in supply nationwide was seasonal. Every year, the number of properties for sale tends to gradually increase through the Spring, before hitting a peak in early December.
As demand appears to be declining, especially in Sydney, a further increase in supply over the next month should swing more power back toward buyers, leading to lower offer prices. Auction clearance rates will also likely fall. Don’t be surprised if even Melbourne sees a dip in price growth over November.
That said, there’s still reason to be optimistic about the Melbourne property market. If Sydney is our guide on what people can afford, based on current Melbourne home prices, there still seems to be room for prices there to move a little higher.
Another reason to be optimistic in the near term is that Victoria’s population growth is currently the highest in the country, at 2.4 percent per annum. Those people will obviously need a place to live.
Record-low interest rates are the (ultimate reason real estate is so expensive). Barring chaos in the overseas bond market or a shock rate-rise from the RBA, low borrowing costs will underpin demand and should prop up home prices in the near term.
We’ll find out more on Tuesday next week about the RBA’s outlook for the economy. I expect little to change from RBA Governor Philip Lowe’s previous comments. Inflation and wage growth are low, household debt and home prices are high, and the Aussie dollar remains resilient, despite lacklustre economic data. All of that equates to a greater chance of a rate cut than a rate hike.
As I’ve mentioned before, barring chaos overseas, home price growth should remain relatively flat for the foreseeable future. After all, that’s what our regulators want, and they seem to be holding all the cards for now.