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Aussie auctions are running hot again, as eager buyers push price growth to the limit across the country
Auction clearance rates are roaring higher, as 90% of Canberra and around 80% of Sydney, Melbourne and Perth auctions sold over the weekend, according to preliminary figures.
Compare that to around 55% in Sydney and Melbourne this time last year and 45% in Canberra.
With 65% rates associated with mild price growth, the current activity is expected by ANZ economists to push price growth to its peak in the coming months.
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Please, not all at once.
Anxious buyers appear to be flooding into the real estate market this year, with around four in five selling at auction around the country.
According to preliminary CoreLogic figures, buyers snapped up an astounding 90% of Canberra properties at auction and 80% of properties at auction in Sydney, Melbourne and Perth over the weekend.
While the final figures for each city will come in a little lower as sales are confirmed, it demonstrates the momentum now careening through the market. For reference, auction clearance rates of 65% and above typically inspire modest price growth. Rates closer to the 80% mark, if sustained, will likely see prices climb higher still as buyers compete.
It marks a miraculous turnaround for the capital markets. Over the same weekend last year, Sydney and Melbourne clearance rates wallowed at around 55%, while Canberra's sat at 45%. Those kinds of results characterised more than 12 months of declining prices and subdued buying and selling activity, taking the edge off 2017 record high prices.
In the middle of last year, it began to turn around with three interest rate cuts, a tax cut, easing of credit regulations, and a Coalition federal election victory which all but obliterated any chances of negative gearing reform. In tandem, it helped spur a market recovery. With Domain now forecasting 8% price growth nationally, led by 10% in Sydney this year, it's widely expected 2017 highs will soon be surpassed.
But for how long? ANZ economists put price growth to peak in the coming months, after which it may taper off as prices meet affordability constraints.
https://twitter.com/ANZ_Research/status/1229185229677613061
Current price growth may be exacerbated by a limited supply coming to market. While the current recovery may be on track to be the fastest on record, auction activity remains "well down on boom levels", according to AMP Capital chief economist Shane Oliver.
https://twitter.com/ShaneOliverAMP/status/1228659969051914241
As prices grow, and the year wears on, more sellers may be encouraged to go to auction, tempering otherwise exorbitant growth.
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