When Things Get Hot You Eventually Need To Take A Dip

Results for week ending May 17

Auction clearance rates have remained strong in Sydney and Melbourne this week although they have come down slightly from last week’s highs.

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

Sydney clearance rates remained strong despite coming off a record high last week. This result showed that demand for properties dropped slightly more than the reduction of auctions. I mentioned last week that it was worth watching the market’s response to auction volumes. And to be honest, given the reduction in volumes and the record low interest rates, I thought clearance rates may have crept even higher. However, when it’s hot you eventually have to take a dip. Just don’t think it means it’s not hot. Sydney is still tracking way above 80%.

Melbourne had a similar story to Sydney according to the auction clearance patterns. Interestingly the vibe around Melbourne was a lot more bullish. Maybe it’s because crazy things like this happened, where a couple went out for a stroll and bought a $2.275million investment property as they walked by, or because another property sold for $1million above reserve. I can’t wait for next week’s stories!

What It Means For Investors

I almost broke out into a nervous sweat reading some of those stories from the weekend. It really made me think it’s a time where we as investors have to remain smart with our approach. With a whirlwind around us it can be easy to either get frozen to our chairs or, as the stories above seem to indicate, get carried away in the moment. But whatever action we take it’s as important as ever that we keep a long term view with our investing. Proper planning, especially of debt, will go a long way to helping our cause.

2015 Budget Bonus

Property investors had little to celebrate or complain about in the 2015 Budget. In fact it was a ‘no surprises’ budget for investors. However, one commentator thought that changes to assets tests for retirees could be a ‘game changer’.

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.