No Fear Ahead of Federal Election

Date: 22/06/2016

Results for week ending June 19

After a lack-lustre Queen’s Birthday weekend, the preliminary combined capital city clearance rate bounced back to 67.8 percent this week. A total of 2008 homes were brought to auction, nearly double that of last week, and on par with two weeks ago.

The Stats

Sydney was the only capital city to post a result in the 70s, as 74.7 percent of 728 auctions found successful bidders. Only 427 homes were auctioned last week, in light of the holiday weekend. The prior week, 692 auctions were held.

The winter chill seems to be settling in over Melbourne as only 68.2 percent of auctions cleared successfully. Auction volume was 964, similar to two weeks ago when the final clearance rate was 71.1 percent.

The Graph

The Preliminary Numbers

	Sydney	Melbourne	Brisbane	Adelaide	Perth	Tasmania	Canberra
Clearance Rate	74.7%	68.2%	44.3%	67.7%	34.8%	57.1%	58.0%
Auctions	728	964	120	80	55	9	64

The Analysis

Next weekend is expected to be another busy one, as sellers aim to close deals ahead of the election. Demand seems to be falling off slightly in Melbourne, although Sydney appears to be holding strong.

Uncertainties surrounding the Federal election and the Brexit vote continue to be staved off by record low interest rates. A fall in borrowing costs has not only improved affordability for the owner-occupier market but also renewed investor demand.

What It Means For Investors

The negative gearing battle is raging in the lead up to the election. Real estate agents have united together in resistance to the Labor Party’s proposed changes, handing out anti-Labor leaflets to prospective customers attending open inspections.

The REIA has created a website aimed at stoking fear in the hearts of voters. The industry advocate’s list of negative gearing woes includes falling house prices, diminishing government revenue, job destruction and an economic recession.

Could a change to one little tax law really wreak so much economic havoc? If so, what does that say about the fundamental strength of our real estate market?

For the historical data of weekly auction clearance rates, click here.

By Jason Staggers

Jason was a personal mentor working with Steve McKnight's Property Apprentices. He helped hundreds of investors apply Steve's teachings in the real world and achieve greater results on their journey to financial freedom. Jason now lives in Perth, WA where he leads Neuma Church.