Buying A House Is As Easy As Walking The Dog … Or Is It?

Results for week ending July 26

Auction clearance rates were strong again in Sydney and Melbourne with clearance rates of 82.7% and 76.5 respectively. The national result came in at 77.7%

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

Whether walking the dog cost you $1.76 million, or you were prepared to pay $1.5 million above reserve on what was thought to be a $1.25 million property, Sydney had the property for you! It’s strange some of the events a market can throw up at you when auctions are clearing at over 80% for 6 months (this week being 82.7% just for the record).

Melbourne’s auction clearance result of 76.5% was another solid performance for the city especially as auction volumes were up 13% for the week. And Melbourne’s ongoing auction market performance was well reflected in last week’s Domain House Price Report which showed Melbourne house prices increased by 3.5% in the June quarter (and 10.3% for the year). Senior economist Andrew Wilson sees confidence in the market as ‘fully recovered’ and now believes that this will be reflected by movement in the underperforming budget markets of the north and west.

What It Means For Investors

Investors have their work cut out for them sifting the wheat from the chaff if they want to do more than buy and hope. We don’t know the full story from above but I do suspect buying a property whilst out walking your dog is fraught with extreme danger! And while we know that the cheap price of money from record low interest rates is fuelling much of the price growth (and perhaps some whacky behaviour) we can find a more ‘big picture’ analysis of why prices are rising here. This type of information will only add to our tool kit as we try and understand property markets and select properties that will perform for us as investors into the future. Woof! Woof!

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.