The prospect of another interest rate rise on Melbourne Cup day has shaken buyers’ confidence, sending auction clearance rates to their lowest level in seven months, data from CoreLogic shows.
Preliminary results show 68.5 per cent of the reported auctions across the combined capital cities were successful, which is 2.3 percentage points lower than the previous week and weaker than the average for this time of the year.
This four-bedroom, three-bathroom house at 31 Canonbury Grove, Dulwich Hill sold for $2.9 million, which was $400,000 above the reserve according to Ray White.
It comes as the number of homes taken to auction soared to 3383, which is the largest volume since the week before Easter last year.
Tim Lawless, CoreLogic research director, said such a large number of auctions was always going to test the depth of buyer demand.
“Basically, it has not passed the test as shown by the lower clearance rates, which lines up with renewed speculation that interest rates are about to go higher once again,” he said.
“It’s probably fair to say confidence has taken a hit and some buyers have become more nervous about the housing market outlook.”
The higher-than-expected inflation data for the third quarter released last Wednesday has prompted some economists to predict another interest rate rise as early as next month.
Nearly one in four properties taken to auction were passed in, suggesting the lower clearance rate was mostly a factor of buyers losing confidence or becoming less willing to meet vendor price expectations, Mr Lawless said.
In Sydney, clearance rates fell by 3.4 percentage points to 70.8 per cent as auction volume jumped by 22.2 per cent to 1086.
Thomas McGlynn, a Sydney-based real estate agent and chief executive of BresicWhitney, said further interest rate increases could shift the market by the end of this year.
“If we get more than one interest rate rise before the end of the year, that could be enough to send us on a different path once again, as that will put significant pressure on households,” he said.
“We’re not quite seeing a massive shift yet, but it does start to feel like that the average property is taking longer to sell, and the market is not performing like it had been earlier this year.
“So I don’t think that the Sydney property market is out of the woods just quite yet.”
Sydney-based independent auctioneer Clarence White said family homes were still in high demand, but listings were saturated with ex-rental properties.
This three-bedroom, two-bathroom house at 5 Elm Grove, Armadale, in Melbourne’s inner south-east sold for $5.45 million, which was over $1 million above the reserve price.
“Most of the buyers out there at the moment are owner-occupiers, but there’s an over-representation of investment-grade stock being sold because investors are getting rid of their investments or trading them up, so you have a bit of a mismatch,” he said.
“Active buyers are looking for good-quality family homes, but there’s not many of those and a lot of investor-grade stock, which is a lot harder to sell.”
A four-bedroom, three-bathroom house at 31 Canonbury Grove, Dulwich Hill in Sydney’s inner west was among those that attracted strong bidding over the weekend.
The house sold for $2.9 million, which was $400,000 above the reserve after fierce competition among four active bidders, according to lead agent Nick Karvouniaris of Ray White Dulwich Hill.
A deceased estate home at 16a Chiswick Street, Chiswick, also in the inner west, sold for $7.21 million, which was among the highest auction sales over the weekend according to Ray White.
In Melbourne, clearance rates held steady at 68.6 per cent despite a 49.5 per cent increase in auction volumes to 1703.
A three-bedroom, two-bedroom house at 5 Elm Grove, Armadale in Melbourne’s inner south-east notched up one of the highest results in the city over the weekend.
Buyer’s advocate Emma Bloom, who was at the auction, said the property sold for $5.45 million, which was over $1 million above the reserve price.
“The property was in a great location and there’s not a lot of this type of property in the market at the moment, so when they come up, they get snapped up quickly,” she said.
In the smaller capital cities, Brisbane cleared 58.9 per cent of the reported results. Adelaide posted an 85.1 per cent preliminary clearance rate, the only capital city to record a rise in early results.
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