Melbourne’s clearance rates spiked at 81% last weekend, the highest rate since April 2017, while Sydney recorded its highest rate in two-and-a-half years. The results put the big city markets back to levels achieved in the 2016 and 2017 boom, but with fewer properties for sale.
The price of homes in capital cities lifted an average of 1 percent in August, according to real estate data firm CoreLogic, boosted by a 1.6 percent jump in Sydney and a 1.4 percent rise in Melbourne. Prices in five of the eight states and territory capitals went up, although Darwin (-1.2 percent), Perth (-0.5 percent) and Adelaide (-0.2 percent) prices continued to fall. “I wouldn’t expect we will continue to see a 1.6 percent increase each month going forward, but I expect we will see values increase,” said CoreLogic’s head of Australian research Cameron Kusher.
Brisbane and Adelaide also reported higher clearance rates than the previous week. Melbourne’s clearance rates have gradually risen in the past two months. Domain economist Trent Wiltshire says the surge in sales has surprised many. “Undoubtedly, more buyers are out there and the increase in clearance rates has jumped faster than most people expected.“It’s a very strong result and it continues the trends of clearance rates rising over the last couple of months,” he says.
Sydney’s preliminary clearance rate was 85% on the reported results of 500 scheduled auctions in the week to Saturday, up from the previous week’s preliminary 82% figure–a number CoreLogic subsequently reduced to 76% once more of the 446 auction results included.
While apartments appear to have had smaller price falls than houses, CoreLogic’s figures do not fully pick up falls in the value of off-the-plan apartments. Australian Bureau of Statistics figures from July show building approvals for new homes fell 3.3 percent, but approvals of other dwellings, including apartments, were down a steeper 18.4 percent in the month and 44 percent over the year.
Property Council of Victoria executive director Cressida Wall stressed the need for buyers to exercise diligence when purchasing properties.“Overall, the clearance rates for apartments have been rising since November last year and, while there may be individual circumstances, most buyers factor this in as one consideration that they have when making one of the biggest purchases of their life,” she said.
There have been some positive developments for the property market in recent months, however — the Reserve Bank has cut its cash rate twice, which can flow through to mortgage rates, and we expect more cuts. Previously, banks have to assess whether borrowers could service a mortgage if interest rates jumped above 7 percent. That level has now lowered to within 2 or 2.5 percent above the current rate, meaning people can borrow more. A family, earning a household income of $109,688, could borrow up to $60,000 more, if they assessed their loan at 6.25 percent instead of 7.25 percent, according to financial comparison website RateCity.
Its analysis suggested that a single person, in the same scenario, may borrow an extra $50,000. APRA has eased off the brakes slightly, but that doesn’t mean it will be a complete field day for borrowers. There are still several checks and balances in place to make sure people aren’t jumping into home loans they can’t afford to repay.
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