The housing market correction has taken a breather, with preliminary auction clearance rates lifting off their two-year low as rising interest rates tested buyers’ limits and new listings of better-quality homes slowed.
CoreLogic reported a preliminary clearance rate across the mainland capitals for the week to Saturday of 58.6 per cent, up from the previous week’s 55 per cent – the lowest since April 2020 – and a figure subsequently revised down to 53.2 per cent.
In Sydney, the initial rate of 57.5 per cent – based on 487 results reported so far of the city’s 610 scheduled auctions – was five percentage points up on the previous week’s 52.5 per cent, a figure later revised to 49.9 per cent.
Melbourne returned a preliminary clearance rate of 59.4 per cent, also up from the previous week’s 56.8 per cent even as – like in Sydney – the number of scheduled auctions fell.
Even as a glut of unsold homes in Sydney and Melbourne forces sellers to discount asking prices, ending the fear of missing out – or FOMO – that has gripped buyers for the past couple of years, the largest market correction in 40 years is playing out selectively and its effects are not felt across the board.
“It’s really segmented into two parts,” said Melbourne buyers agent Julie DeBondt-Barker, who specialises in first-home buyers.
“There are still areas that are going up, or at least holding their own – the northern and western suburbs are still pretty solid price-wise.
“The second part would be what will be skewing the numbers. There is a lot of one- and two-bedroom apartments coming on the market.”
In Sydney’s inner-eastern Darlinghurst, a two-bedroom, one-bathroom terrace house sold for $1,365,000 on Saturday in an auction that pitted an investor from neighbouring Paddington against a young professional family from the northern suburbs.
The family buyer won out for the do-it-upper at 192 Crown Street with plans approved for a conversion of the three-level dwelling into a three-bedroom home with two bathrooms and a front balcony.
The reserve price was not disclosed but the final selling price was 30.8 per cent above the highest offer prior, Ray White Touma Group sales agent Charles Touma said.
Vendors were adjusting their asking prices and buyers were also bidding with an eye on what higher borrowing costs were likely to cost them.
“Buyers have already factored in current and future interest rate rises, which is reflected in the prices they are offering,” said Ray White NSW chief auctioneer Alex Pattaro.
But the market is forcing vendors to make concessions. In Melbourne’s leafy eastern suburb of Balwyn North, a mock-French Provincial style mansion on 1012 square metres sold for $4.3 million, less than the $4.55 million it changed hands for in August 2017.
Agent Brian Chen of VicProp Manningham said the five-bedroom, four-bathroom, 33 Jacka Street home would have probably fetched a higher price if it were sold five months earlier.
“The successful bidder got a good price,” Mr Chen said. “He was ready to pay probably 30-40 per cent upfront. He wasn’t going to borrow too much money.”
Adelaide and Canberra posted the highest preliminary clearance rate of the smaller capitals, with a rate of 68.6 per cent, based on the results reported to date of Adelaide’s 159 and Canberra’s 88 scheduled auctions.
Brisbane, which had 143 scheduled auctions, recorded a 43.6 per cent preliminary clearance rate, its lowest since November 2020, when it touched 36.4 per cent, CoreLogic figures showed.
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/two-part-housing-market-bumps-along-the-bottom-20220710-p5b0fw