Where There’s Life There’s Hope

Results for week ending March 20

The combined capital cities weighted average clearance rate shot back up above 70 percent this week, despite the near-record number of homes on offer.

The Stats

Sydney was host to 1,103 auctions, with a preliminary clearance rate of 75.5 percent. Though the rate fell well short of last year’s booming result in the mid-80s, buyers made their presence emphatically known throughout most of the city. Results were however gloomy in the outer west, with clearance rates in the low to mid 40s, thanks to a drop-off in investor demand.

In Melbourne, 1,784 auctions were held, nearly breaking the record set at the end of November last year. The clearance rate still managed to rise several points to 72.3 percent.

Brisbane also came close to breaking an auction volume record, with 281 homes brought to market. Demand was relatively strong, with a 17-point jump in the clearance rate to 55.8 percent.

The Graph

The Numbers

The Analysis

Last week I reported that Saturday’s results would be a significant test for the market, and could set the tone for buyer confidence over the coming months.

The recent show of strong demand in Sydney and Melbourne reveals that buyers remain optimistic despite high prices, tougher lending standards and mixed economic news from around the world.

What It Means For Investors

Before there can be a significant market correction there needs to be an event that causes people to try to exit their property position rapidly. Traditionally this would be as a result of a spike in interest rates and/or an increase in unemployment. Neither seems to be likely at the moment. That leaves an adverse change to negative gearing, which is possible, but remains a dark horse in the property race.

With interest rates set to be low for the foreseeable future, it seems the conditions for growth in areas where people want to live (as opposed to investors speculating) have good prospects. Just tread with care.

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.