A ‘cracking’ start to 2024 with strong weekend property auction results
It was the second-biggest start since 2008 with 1,671 homes going under the hammer
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More than seven in 10 homes that went to auction on Saturday sold under the hammer, delivering a preliminary national clearance rate of 73.9 percent across the combined capital cities, according to CoreLogic data. The strongest result was seen in Canberra where 80 percent of the 75 homes auctioned were sold. Adelaide recorded a 77.6 percent clearance rate, Sydney 76.3 percent, Melbourne 71.9 percent and Brisbane 68.5 percent.
Impressive clearance rates were also recorded in regional areas. Newcastle and Lake Macquarie hosted 37 auctions with a 77.8 percent clearance. The Gold Coast saw 126 homes go to auction with a clearance of 65.3 percent. For perspective, a clearance rate of 60 percent reflects normal market conditions, with anything above this indicating strong selling conditions and high buyer demand.
Australia’s biggest agency network, Ray White, also reported a 74 percent clearance rate for the 387 auctions it conducted on Saturday. The company said the market was roaring back in 2024, with the number of buyers attending open inspections up by 24 percent since 1 January compared to the same period last year.
CoreLogic said the first major week of auctions had set a “cracking pace” for the market in terms of volume and sales success. Saturday was the second-biggest start to a new year’s auction season since CoreLogic began keeping records in 2008. A total of 1,671 homes went to auction across the capital cities. CoreLogic economist Kaytlin Ezzy said the clearance rates in Sydney and Melbourne represented “a sizeable step change” compared to the end of last year.
“Overall, it looks like auction markets are starting the year on a strong footing,” Ms Ezzy said. “Potentially, the news of low inflation and the possibility of early rate cuts is already boosting sentiment. The next few weeks should provide further guidance on whether this strong result is simply some early-year exuberance or a trend that can persist.”
Last week the Australian Bureau of Statistics revealed inflation fell to 4.1 percent in December, lower than the expected forecast of 4.5 percent, representing a two-year low. Prior to the figures being released, most economists were predicting that interest rates could start to fall by September this year.
The first interest rate decision by the Reserve Bank will be announced at 2.30pm today. Following on from changes signalled last year in the way the rate decision is announced, Governor Michele Bullock will conduct a press conference to explain the board’s decision and answer questions from journalists at 3.30pm.
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A legacy “partner” lease structure tied to sales, not fixed rent, is drawing investor attention as a potential hedge against inflation.
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A McDonald’s restaurant in Yass has been brought to market with one of the last remaining pure turnover leases in Australia, offering investors a direct share of revenue rather than a traditional fixed rental return.
The asset, located at 1713 Yass Valley Way, is being marketed by JLL via an expressions of interest campaign closing on 30 April. It is underpinned by a legacy lease structure no longer offered by McDonald’s in Australia.
Under the arrangement, the landlord receives 6.5 cents for every dollar spent at the restaurant, creating uncapped income growth linked directly to sales performance.
The lease is structured as triple net, meaning no operational risk, capital expenditure obligations or management responsibilities for the owner.
According to JLL, the property has recorded compounded annual sales growth of 4.26 per cent since 2003, with rental income rising by 150 per cent over the same period.
JLL’s David Mahood said the structure allows investors to “participate directly in the sales growth” of the business, rather than relying on fixed annual rent reviews.
The newly commenced lease runs to 2036, with four additional 10-year options extending to 2076, providing a weighted average lease expiry of 9.92 years by income.
The asset sits on a 3,571 square metre freehold site in Yass, with significant frontage to the Hume Highway, one of Australia’s busiest freight corridors.
The location benefits from high volumes of passing traffic, including an estimated 75,000 vehicles per day.
The quick service restaurant sector has remained resilient through economic cycles, including the pandemic and recent cost-of-living pressures, with McDonald’s continuing to expand its footprint and invest in store upgrades across Australia.
JLL pointed to strong investor demand for McDonald’s-backed assets, with recent transactions typically yielding between the high 2 per cent to mid 3 per cent range.
The Yass listing is expected to attract interest due to the scarcity of turnover-based leases, which provide a natural hedge against inflation by linking income growth to consumer spending rather than predetermined increases.
McDonald’s Yass is available for sale via an Expressions of Interest campaign closing at 3:00pm (AEST) on Thursday, April 30.
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