RBA Holds Steady After Quiet Auction Weekend

Results for week ending October 2.

Thanks to the AFL and NRL Grand Finals and the Labour Day long weekend, auction volume across the combined capital cities was subdued this week. Only 853 homes were auctioned and the preliminary clearance rate dropped over 7 basis points to 68.2 percent. Last week, a total of 2,480 properties were brought to auction, with 75.4 percent finding bidders.

The City Stats

In the AFL-mad city of Melbourne, only 111 vendors were keen enough to auction their properties, but plenty of buyers were still out looking to capitalise. The preliminary clearance rate was 92.8 percent, the highest for the city this year. Last week’s final results show 77.2 percent of auctions were successful.

In Sydney, 519 sellers braved the holiday weekend, and preliminary results showed a clearance rate of 83.8 percent. Last week, the clearance rate was 80.4 percent across 946 auctions.

The Graph

The Preliminary Numbers

* only 2 auctions were reported; neither were successful

The Analysis

There’s not much to take away from this week’s results in light of the weak holiday weekend supply. Next week, volume will be back to a normal range for this season, with 1,085 auctions scheduled for Melbourne, and 731 scheduled for Sydney.

Here’s CoreLogic’s latest chart showing the combined capital city four-week auction clearance rate average:

A few noteworthy property sales around Melbourne, reported by Domain include:

• a four-bedroom home at 6 Katandra Court, Mount Waverley, sold for $1.26 million
• a three-bedroom unit at 404/20 Pier Lane, Maribyrnong, sold for $1,082,500
• a three-bedroom home at 1B Boxleigh Grove, Box Hill North, sold for $1,017,500
• a six-bedroom home at 54 Hawthorn Road, Burwood East, sold for $980,000

As expected, robust demand in the auction market is translating into rising home prices. Here are the results from CoreLogic’s latest home value index report:

What It Means For Investors

New RBA chief Philip Lowe chaired his first board meeting today. Our central bank decided to hold the target cash rate steady at 1.50 percent.

Housing demand is clearly being spurred on by record-low mortgage interest rates. The RBA will face a challenging balancing act if inflation results for the September quarter prove disappointing. The Australian Bureau of Statistics will release those figures on October 26.

Unless there’s an unexpected change in the outlook for wage growth, another rate cut may be on the cards soon. The Australian dollar is proving very resilient as overseas investors seek higher yields in Aussie bonds, which is driving up demand for our currency.

How the RBA will deal with both weak inflation and a strong Aussie dollar in light of our strengthening housing markets, particularly in Melbourne and Sydney, will be interesting to see.

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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.