Records And Freight Trains
Results for week ending 19 April
Sydney had a record weekend whilst Melbourne maintained its strong performance. Adelaide and Canberra continued clearance rates slightly above the 70% mark.
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
Auction Clearance Rates | Clearance Rate | Auctions |
| Sydney | 88.3% | 793 |
| Melbourne | 78.7% | 1085 |
| Brisbane | 48.3% | 87 |
| Adelaide | 70.5% | 61 |
| Perth | 21.1% | 19 |
| Tasmania | 33.3% | 6 |
| Canberra | 73.7% | 19 |
Source – Corelogic RPData
The Analysis
Records tumbled this week as Sydney reached a peak clearance result of 88.3%. This is placing strong pressure on housing prices across the city. Many prices were coming in at records for their respective suburbs.
Melbourne wasn’t far behind with 78.7% of auctions clearing. Melbourne’s outer east was particularly strong with a clearance rate well above 90%. The market is being described by some as “moving like a freight train” and it is hard to disagree!
Adelaide and Canberra continue to perform solidly bouncing around the 70% mark.
What It Means For Investors
With ongoing strong performances in Sydney and Melbourne, the question begs whether the market can be sustained (this idea came up in discussion in a previous article of mine). I have said before I think the fundamentals are fine, but are house prices sustainable as they outstrip rental growth? Well, I suppose it depends on why people are buying and selling, and the level of supply. According to some, investors are looking away from the market. Investors seem to be getting ‘crowded out’ by prospective home owners keen to make a purchase – at least in Sydney. My guess is as long as owner occupiers want to upsize, or downsize, or scramble into the market there will be a pull on prices. And owner occupiers will probably keep doing this while interest rates are low and the weather is good.
So if you are looking into the Sydney or Melbourne markets there is a fair chance you are feeling the heat. But there is no need to panic or despair because you can avoid being run over by that metaphorical ‘freight train’ by improving your skills and making a plan. Understanding your purchasing budget will also go a long way to avoiding costly mistakes.
Comments
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Hi Andrew,
Interesting figures still !! I happened to hear on the radio today that Qld’s net immigration figure is the lowest it has been in a while. Comments I heard were indicating that many from Qld were heading down to (or back to) Vic and NSW !!
Is this those who were employed in Mining “going back home”? Whatever, it seems the Vic and NSW immigration numbers may be higher than ever(?) That could put some pressure on housing prices eh?
Re this :-
Andrew> “According to some, investors are looking away from the market. Investors seem to be getting ‘crowded out’ by prospective home owners”
It was just days ago that I commented similarly, along the lines of “Investors don’t push up house prices to keep home buyers out” – if the numbers don’t make sense at a higher price-point, investors just don’t buy !! One exception might be if a houseblock might allow significant development, thus justifying the payment of a higher price by a developer.
But usually it is the homebuyer that “pushes” the market upward. As prices go up, yields drop, and investors become far less interested in purchasing, leaving the floor open to home-buyers.
Benny