Rate rises weigh on spring selling enthusiasm

7 views 2022-09-13 17:55:36

Clearance rates held steady over the past week even as auction listings picked up, although the traditional surge in auctions later in spring is likely to be more muted this year as sellers and buyers navigate the rise in interest rates.

There were 1920 auctions listed around the country over the last week, up 5.3 per cent from 1823 the previous week and above the 1453 auctions listed for the comparable period last year, when the market was still disrupted by lockdowns.

The preliminary clearance rate nationally was 61.7 per cent, easing back only slightly from the preliminary rate the previous week of 62.3 per cent, which was finalised at 59.4 per cent, on CoreLogic’s tally.

Listings rose 1.9 per cent in Sydney on the previous week, with a preliminary clearance rate of 60.6 per cent, in line with the previous week. In Melbourne, auction listings jumped 9.4 per cent, with a preliminary clearance rate of 63.2 per cent, down 1.5 percentage points.

But the big bounce that typically takes place in spring – last year’s spring market took off in October after lockdowns came to an end – is less likely this year, according to veteran analyst Louis Christopher, founder of SQM Research.

Mr Christopher said the 2021 volume of sales would most likely dwarf this year’s tally.

“It’s extremely difficult time, where both vendors and buyers are cautious. And so, the expectation is that sales volumes are going to be well down this spring compared to 2021 levels and indeed 2020 levels,” he told The Australian Financial Review.

Nevertheless, there is little sign of distress in the market, with vendors in no state of panic or being forced to sell. On the buying side, while increased borrowing costs are knocking many buyers out of the market, there are enough left to hold up clearance rates so far.

“I think the period of shock and awe with the initial rate rises is over in the marketplace,” Mr Christopher said.

“The buyers who are qualified out there are well and truly aware of the current environment, and they take the view that there’s some good buying conditions out there right now. It is a buyer’s market, no question.

“So from a buyer’s perspective, those who do qualify, those who are keen, they look at the market as potentially offering bargains.”

Seizing the moment this week was a local family in Sydney’s Sutherland Shire which snapped up a four-bedroom waterfront home at Dolans Bay for $3.58 million at auction.

“Astute buyers know that right now they might only have a handful of competitors for the same house. Last year I had at least nine buyers on average for each house I sold in 2021,” said selling agent Alex Pitsis of APG Ray White Cronulla.

“Buyers know there is still value in the prestige market. The buyer today told me that this property would have been out of their reach a year ago.

Meanwhile, in Melbourne, buyers agent David Morrell of Morrell & Koren noted two examples in upmarket, inner-city Prahran where homes had sold comfortably above their quoted prices.

“Clearly interest rate rises haven’t put a dint in it. The lack of choice is pushing it along,” he said.

Among the smaller capitals, Adelaide achieved a preliminary clearance rate of 77.8 per cent from 125 listings, while Brisbane recorded 42.4 successful sales from 126 listed. The clearance rate in Canberra was 61.9 per cent from 101 listings, on CoreLogic figures.

This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/rate-rises-weigh-on-spring-selling-enthusiasm-20220911-p5bh5c

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