Auction Markets Strong In Face Of COVID
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Auction Markets Strong In Face Of COVID

The nation’s capitals showed resistance against uncertainty.

By Kanebridge News
Mon, Jul 19, 2021 10:38amGrey Clock 2 min

Auction activity has remained strong, despite increased COVID restrictions across Sydney and Melbourne.

A total of 2179 homes were listed for auction capital city markets on Saturday, July 17 – a new record for July, surpassing the previous high of 1869 set just last weekend.

Across all capitals, auction numbers continue to track around double the levels recorded for the same weekend last year.

Record auction numbers also failed to slow the auction clearance rate with a national rate of 80.5%, higher than last weekend’s 79.5% and well ahead of the 62.5% recorded over the same weekend last year.

Clearance rates were higher in all capitals on Saturday – with the exception of Canberra and lockdown impeded Melbourne – the latter recording the lowest result of all the auction capitals (73.2%).

In Sydney, auction clearance rates held the line against tightening restrictions with a rate of 78.0% – a small rise from last weekend’s year low of 76.6%.

The weekend clearance rate continues to be influenced by a high number of withdrawals with a total of 21.0% of reported auctions  – around double the pre-shutdown results.

Still, a July record of 872 auctions was reported listed in Sydney on Saturday – higher than the 782 auctioned the previous weekend and well ahead of the 471 recorded over the same weekend last year.

Sydney recorded a median price of $1,603,000 for houses sold at auction at the weekend which was similar to the $1,631,000 reported over the previous Saturday.

However, Melbourne’s market proved to be less resilient when faced with the lockdown.

The Victorian capital still reported a robust 73.2% clearance rate, however, was down on last weekend’s 76.7%  – the lowest weekend result since the previous shutdown impacted the result on June 12 at 69.0%.

The lower clearance rate was clearly impacted in a surge of lockdown-related withdrawals with 27.4% of listed auctions reported withdrawn – well ahead of the 9.5% withdrawals reported the previous Saturday.

Another July record 1061 homes were listed to go under the hammer on Saturday –  ahead of last weekend’s previous record 977 auctions.

Melbourne recorded a median price of $992,500 for houses sold at auction at the weekend which was higher than the $983,000 recorded over the previous weekend and 20.2% higher than the $825,000 recorded over the same weekend last year.

Data powered by Dr Andrew Wilson of My Housing Market.

 

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Mortgage holders should brace themselves for more pain as the Reserve Bank of Australia board prepares to meet tomorrow for the first time this year.

Most economists and the major banks are predicting a rise of 25 basis points will be announced, although the Commonwealth Bank suggests that the RBA may take the unusual step of a 40 basis point rise to bring the interest rate up to a more conventional 3.5 percent. This would allow the RBA to step back from further rate rises for the next few months as it assesses the impact of tightening monetary policy on the economy.

The decision by the RBA board to make consecutive rate rises since April last year is an attempt to wrestle inflation down to a more manageable 3 or 4 percent. The Australian Bureau of Statistics reports that the inflation rate rose to 7.8 percent over the December quarter, the highest it has been since 1990, reflected in higher prices for food, fuel and construction.

Higher interest rates have coincided with falling home values, which Ray White chief economist Nerida Conisbee says are down 6.1 percent in capital cities since peaking in March 2022. The pain has been greatest in Sydney, where prices have dropped 10.8 percent since February last year. Melbourne and Canberra recorded similar, albeit smaller falls, while capitals like Adelaide, which saw property prices fall 1.8 percent, are less affected.

Although prices may continue to decline, Ms Conisbee (below) said there are signs the pace is slowing and that inflation has peaked.

“December inflation came in at 7.8 per cent with construction, travel and electricity costs being the biggest drivers. It is likely that we are now at peak,” Ms Conisbee said. 

“Many of the drivers of high prices are starting to be resolved. Shipping costs are now down almost 90 per cent from their October 2021 peak (as measured by the Baltic Dry Index), while crude oil prices have almost halved from March 2022. China is back open and international migration has started up again. 

“Even construction costs look like they are close to plateau. Importantly, US inflation has pulled back from its peak of 9.1 per cent in June to 6.5 per cent in December, with many of the drivers of inflation in this country similar to Australia.”

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