Weekend auction results hold promise for spring vendors | Kanebridge News
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Weekend auction results hold promise for spring vendors

Auction numbers, clearance rates on the up as spring market warms

By Robyn Willis
Mon, Oct 10, 2022 9:54amGrey Clock < 1 min

Last weekend continued to see improvement in both the number of houses up for auction and their clearance rates, CoreLogic reports.

After market disruptions caused by football grand finals and public holidays, the market once again found its feet, with 1,799 homes going under the hammer across the country over the weekend. This represents a 11.2 percent increase on the previous weekend and 36.7 percent higher than the weekend prior to that.

Melbourne led the way last weekend, with 721 homes going under the hammer, with a clearance rate of 68.4 percent, the highest since May. In Sydney, 686 homes were auctioned, up 41.7 percent on the Labour Day long weekend the previous week. Clearance rates also improved, with 61.3 percent of homes being sold, the highest rate since August. However, withdrawal rates in Sydney also increased from 17 percent to 21.1 percent, showing vendor uncertainty remains.  

The smaller capitals all experienced greater auction activity, except for Perth. No auctions were held in Tasmania.

While the steady rise is encouraging, head of research at CoreLogic Tim Lawless points out numbers are not as strong as the same time last year.

“There has been a consistent improvement in the auction success rate since the last week of July when the combined capitals clearance rate was recorded at 51.9 percent (based on finalised numbers),” Mr Lawless said. “Melbourne came in at 66 percent, Sydney and 61 percent and Adelaide nearly broke the 70 percent mark this week based on the preliminary numbers.

The volume of auctions is holding lower than last year – a reflection of less stock flowing onto the market, as well as more vendors choosing to use a private treaty campaign over auctions.”

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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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