Auction Markets Running Out Of Steam
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Auction Markets Running Out Of Steam

The May seller rush continues to test the market.

By Kanebridge News
Mon, May 24, 2021 11:10amGrey Clock < 1 min

Home auction markets reported mixed results over the weekend, May 22, as more record-level offerings tested buyer depth.

National listing numbers were again lower on Saturday but stayed within touching distance of the <ay record of 2563 reported two-weeks ago with 2333 auctions this past weekend.

The national average clearance rate increased to 82%, higher than the previous weekend’s 80.8% and the first rise in six weekends. However, despite the lift, it is smaller markets like Adelaide (90.1%) and Canberra (91.2%) carrying the results.

The larger auction capitals of Sydney and Melbourne are showing signs of fatigue and are expected to drift downwards over the next coming weekends.

Sydney reported a clearance rate of 81.5%, again lower than the 82.9% recorded the previous weekend. Saturday’s results were the fifth consecutive weekend of lower rates.

A total of 949 auctions were reported in the Harbour City, again just below the previous weekend’s 990.

Sydney has now recorded an unprecedented four consecutive weekends with more than 900 auctions, with this weekend’s median price of houses sold at auction sitting at $1,620,000, lower than the previous Saturday’s $1,641,000.

Melbourne reported a clearance rate of 76.9% which was again below the 78.6% of the previous weekend and just ahead of the 74,0% recorded over the same weekend last year.

Saturday, May 22 was the lowest clearance rate of the year so far.

A total of 117 homes were auctioned in Melbourne, close to the previous weekend’s 1159 listings.

Melbourne recorded a median price of $995,500 for houses sold at auction on the weekend which was 9.8% lower than the $1,093,000 recorded over the previous weekend, but 9.9% higher than the 906,000 recorded over the same weekend last year.

Data powered by Dr. Andrew Wilson of My Housing Market.

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House values continued to fall last month, but the pace of decline has slowed, CoreLogic reports.

In signs that the RBA’s aggressive approach to monetary policy is making an impact, CoreLogic’s Home Value Index reveals national dwelling values fell -1.0 percent in November, marking the smallest monthly decline since June.

The drop represents a -7.0 percent decline – or about $53,400 –  since the peak value recorded in April 2022. Research director at CoreLogic, Tim Lawless, said the Sydney and Melbourne markets are leading the way, with the capital cities experiencing the most significant falls. But it’s not all bad news for homeowners.

“Three months ago, Sydney housing values were falling at the monthly rate of -2.3 percent,” he said. “That has now reduced by a full percentage point to a decline of -1.3 percent in November.  In July, Melbourne home values were down -1.5 percent over the month, with the monthly decline almost halving last month to -0.8%.”

The rate of decline has also slowed in the smaller capitals, he said.  

“Potentially we are seeing the initial uncertainty around buying in a higher interest rate environment wearing off, while persistently low advertised stock levels have likely contributed to this trend towards smaller value falls,” Mr Lawless said. “However, it’s fair to say housing risk remains skewed to the downside while interest rates are still rising and household balance sheets become more thinly stretched.” 

The RBA has raised the cash rate from 0.10 in April  to 2.85 in November. The board is due to meet again next week, with most experts still predicting a further increase in the cash rate of 25 basis points despite the fall in house values.

Mr Lawless said if interest rates continue to increase, there is potential for declines to ‘reaccelerate’.

“Next year will be a particular test of serviceability and housing market stability, as the record-low fixed rate terms secured in 2021 start to expire,” Mr Lawless said.

Statistics released by the Australian Bureau of Statistics this week also reveal a slowdown in the rate of inflation last month, as higher mortgage repayments and cost of living pressures bite into household budgets.

However, ABS data reveals ongoing labour shortages and high levels of construction continues to fuel higher prices for new housing, although the rate of price growth eased in September and October. 

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