Auctions And A ‘Good Job’ Give A Warm Glow

Results for week ending June 14

Auction clearance rates remained strong for Sydney at 86.5% and very solid for Melbourne at 78.0%. The overall national result was 77.8% for the weekend.

The Stat

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%.

The Graph

The Numbers

The Analysis

Auction clearance rates in Sydney were as strong as ever at 86.5%. The strength of the result was underlined in that there were 14 suburbs which cleared their auction stock at 100%.

During the week RBA governor Glenn Stevens had done his best to throw a bucket of water over the Sydney market but in the end it was to little or no effect at all. Apparently, descriptions of the market as ‘acutely concerning’ or even ‘crazy’ wasn’t enough to dampen local’s enthusiasm for Sydney properties.

Melbourne’s auction market also powered on with their clearances running at 78% for the weekend. It seems even couples that do have good jobs are missing out on properties of their choice – even in Melbourne.

The auction clearance results for the rest of the country was comparable to recent results. The national average for the weekend came in at 77.8%.

What It Means For Investors

It certainly doesn’t hurt to have a good job. The pay is usually better and you’re more likely to come home with a warm glow after a satisfying day on the job. You might even be able to afford a property in Sydney if the Treasurer’s way of thinking holds true. After all, houses must be affordable if they are selling, right?

But whether it’s some sage economic insight or a Paul Keating type moment for Treasurer Hockey I suppose from an investor’s standpoint profitability in a deal is the key. To my way of thinking, whether I can afford a deal or not must be considered in terms of whether I can make a profit or not. And when it comes to Sydney I’d have to be questioning how much profit is left in many properties that have risen 40% over the past three years, cost 11 times the average weekly income, and will take 8 years to save a deposit using 30% of the average income. If nothing else things sure feel stretched in that market.

So, when deals come at a premium, one of the things that will separate a successful investor from their competition will be the level of investing skill they bring to the table.

For past auction clearance rate data, please refer here.

By Andrew Stow

Andrew undertakes residential property developments and has been a moderator for propertyinvesting.com for five years. Andrew’s business background is in outsourced customer service where he was a statistical analyst and workforce planner servicing programmes for top 100 companies.