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Auction rates jump to strongest in a year, following the RBA’s record-breaking rate cut

Aerial image of Australian suburb. Image: Getty
Has Australia's property market turned a corner. Image: Getty

Australia’s auction clearance rates are likely to achieve their strongest numbers in 12 months, new figures show, following a horror long weekend performance.

Research group CoreLogic recorded a preliminary auction clearance rate of 66.4 per cent for the week ending 16 June 2019, and expects that rate to remain above 60 per cent once the final results are registered.

This will be the first time in over a year that clearance rates came in at above 60 per cent, with 1,487 homes taken to auction.

The result followed a plunge to a clearance rate of 48.3 per cent the previous week, however CoreLogic put this down to the Queen’s Birthday long weekend which was marked across most capital cities.

This time last year, 2,002 homes were taken to auction but the clearance rate was only 52.4 per cent.

“Even after we see the usual downwards revision over the week it’s looking like this week will be the most successful result the city has seen since at least April last year, or possibly longer,” CoreLogic analysts said.

Here’s how each capital city did

Sydney recorded the strongest preliminary auction clearance rate (74.7 per cent) from 522 auctions, well up from the 49.4 per cent recorded this time last year.

This was followed by Melbourne, which recorded a 67.9 per cent clearance rate and Adelaide, which recorded a 54.9 per cent clearance rate from 79 properties.

CoreLogic auction clearance rate data. Image: CoreLogic
Source: CoreLogic

Based on the preliminary data, Sydney, Melbourne and Perth have seen an improvement in auction performance, while Brisbane and Adelaide slid slightly.

Canberra saw auction clearance rates tumble from 56.5 per cent to 47.1 per cent.

First full week since RBA rate cut

These figures represent the first full week of market activity recorded since the Reserve Bank of Australia broke records by cutting the official interest rate to just 1.25 per cent, with many commentators expecting the stimulus would serve to boost Australia’s lagging property market.

Speaking to Yahoo Finance, chief economist Nerida Conisbee said the rate cut drives sellers into the market, as mortgage rates soften.

“I do think those auction numbers are going to increase and that’s primarily because there will be more buyers out there and there's going to be more competition for homes,” she added.

Property commentator and economist, Andrew Wilson said buyer confidence also scored a boost following the federal election, which saw a Coalition government returned to government and negative gearing fears quashed.

Commenting on Sydney’s market in particular, Wilson said buyer activity will likely be maintained over winter although the number of properties will be limited.

“This means that if clearance rates are sustained at these latest levels they are likely to put upward pressure on house prices,” he said.

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