The Calm Before The Coming Sales Storm

Results for week ending March 13

The Labour Day long weekend in Victoria explains a quiet auction schedule in Melbourne, but elsewhere the auction clearance results were somewhat bullish.

But any conclusions that might be drawn are somewhat small-scale as we head into the ‘main game’ in the remaining weeks leading into Easter.

The Stats

Sydney is showing signs of solid demand, with a preliminary clearance rate of 72.0 percent. This was a strong improvement from last week’s final result of 68.7 percent. The New South Wales capital was also the busiest, with 680 auctions on offer. That sounds impressive until you factor in there were 26 percent fewer houses for sale compared to the same weekend last year.

Melbourne limped across the 70 percent benchmark with a preliminary reading of 70.5 percent. The Labour Day long weekend makes this result difficult to interpret.

The Graph

The Numbers

The Analysis

Market commentators reported here and here that Sydney’s recent show of strength has been mostly due to competition between older downsizers and young professionals. Wealthy couples in their sixties are cashing out of their family suburban homes to secure their retirement.

Since the kids have moved out at the peak of the market, their nest egg is taking priority over space to host the grandkids. It seems many of them sold last spring and are now renting, just waiting for the right property to come along.

Whether these buyers will match supply and deliver a slam-dunk this weekend is yet to be seen. With over 900 homes expected to be on offer in Sydney alone, the coming Super Saturday will be the ultimate test of market demand, and could set the tone for market confidence leading into winter.

What It Means For Investors

According to a recent press release from the Real Estate Institute of Australia (REIA), “after thirteen consecutive quarters of growth, the weighted average median house price for the eight Australian capital cities decreased in the last quarter of 2015.” Solid growth in Hobart, Canberra and Brisbane wasn’t great enough to offset falling prices in Sydney and Melbourne.

With convincing evidence that Sydney and Melbourne markets seem to have over-stepped their boundaries of affordability, auctioneers will face a tough slog this weekend. As buyers continue to face regulatory resistance, the slam-dunk that sellers are hoping for may end up hitting more rim than net.

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.