The Australian Prudential Regulation Authority’s (APRA) move to raise the lending assessment rate for new home loans to 3 per cent above the current mortgage rate, to come into effect by the end of the month, will reduce borrowing capacity by 5 per cent.
But experts say the impact will take time to manifest, and market activity is likely to accelerate as buyers bring forward their purchase plans.
CoreLogic’s preliminary results showed 83.2 per cent of the reported auctions in Sydney were successful, 80 basis points higher from a week ago. There were 832 homes taken to auction – 10 per cent higher than last week.
Among those auctioned successfully was a home at 6 Lorna Avenue in Sydney’s North Ryde, which fetched $2.481 million – $231,000 above reserve, according to Ray White Gladesville listing agent Joseph Mazar. The home was sold with development approval to build a luxury home.
A Domain report showed Sydney’s median auction house price cracked $2 million for the first time, while the median auction price for units hit $1.16 million – also a record.
In Melbourne, 81.9 per cent of the 1114 results were sold, a drop of 5.1 percentage points compared to a week ago, but a strong outcome considering the sharply higher volume, which rose by 68.6 per cent to 1357.
The Real Estate Institute of Victoria said this was the first time more than 1000 auctions have been scheduled to be held online only.
A competitive auction in Melbourne yielded solid outcomes for vendors of the 9 Monte Carlo Court in Greenvale, which sold for $1.166 million – $166,000 above reserve.
CoreLogic research director Tim Lawless said the strong results showed buyer demand so far was keeping pace with the higher listings.
“If anything, it shows the buyer demand is still strong, and APRA’s policy doesn’t come into effect until the end of the month, so maybe we’re starting to see a little bit of a break forward of demand as borrowers want to take advantage of the current lending conditions before they tighten up,” he said.
“These strong results are on high volumes, so clearly, demand is holding. As we see more of this pent-up supply coming into the marketplace and demand continuing to keep up, it’s a sign that we probably will continue to see upward pressure on housing prices.
“But we know that they are going to be some factors offsetting that, obviously the recent credit tightening and all the other factors that are already in place, such as worsening affordability, and we’re seeing more supply coming into the market as well, so these will continue to test how strong demand will be through late spring and early summer.”
Louis Christopher, SQM managing director, said market indicators so far were pointing to a further rise in activity.
“We expect to see a further rise in listings, so the momentum will continue through Christmas,” he said.
“The macroprudential policy action will take some time before you start to see any impact on the market. Last time when the regulator brought the interest-only restrictions, it took about seven months before we started to see some impact, so these policy actions take time to bear out.”
Nationally, clearance rates fell by 1.1 percentage point to 83.3 per cent – the third consecutive week of auctions clearing 80 per cent.
Across the smaller capital city markets, Canberra reported the highest preliminary clearance rate with 93.6 per cent of auctions returning a successful result – its highest clearance rate since late July.
Adelaide posted 89.7 per cent clearance while Brisbane cleared 81.3 per cent.
Nicola Powell, Domain’s chief of research and economics, said sellers in lockdown cities were reacting positively to the eased restrictions.
“The road map to opening up will continue to bolster seller confidence, particularly in Sydney, Melbourne and Canberra as they hit their mass vaccination targets,” she said.
“Pent-up supply will enter the auction market once selling conditions are clearer. I think we’ll still see prices rise, but I’m really not expecting them to be at such aggressive rate we saw earlier in the year.
“But, I think some buyers might make their purchase sooner with the fear that APRA will impose further lending restrictions in the market.”
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/every-capital-city-hits-80pc-clearance-rate-for-the-first-time-20211010-p58yo6