Homes in Sydney and Melbourne are selling like hotcakes, with auction clearance rates at the highest they’ve been since 2017.
Domain economist, Trent Wiltshire, told Yahoo Finance the preliminary clearance rate in Melbourne was 81.2 per cent and 78.2 per cent in Sydney. Nationally, that figure was 78.4 per cent.
Given they’re just preliminary figures, Wiltshire estimated final clearance rates for the weekend would be 78 per cent in Melbourne and 74 per cent in Sydney.
“For Sydney, that's the highest point since April 2017,” Wiltshire said.
“It’s been pretty strong for a few weeks now. Clearance rates have trended and have held in Melbourne at around 70 per cent for the last few weekends.”
“And even though the borrower can get a mortgage of around 3 to 3.5 per cent, it’s very likely that's coming down lower as well. So that's definitely feeding into it.”
Does this signal the end of the downturn?
“All those things have really seen the market turn around over the past few weekends,” Wiltshire said.
In terms of this cycle, Wiltshire said it looks like the Sydney and Melbourne markets have hit the bottom and are climbing again.
“How fast the rebound is in terms of prices is the big question,” Wiltshire said.
“I’ve forecast pretty modest price growth for the next six to 12 months, but if clearance rates stay in the high 70s it could potentially be a faster turnaround.”
Wiltshire said there’s also a possibility that “people get excited and investors return to the market”, which could see a faster rebound too.
But, Wiltshire said there are enough headwinds that could mean a fast turnaround might not occur.
“That’s things like bank lending still remains pretty tight even though some things have loosened up a bit. The economy is softening, the unemployment rate is kicking up a bit and there are still lots of new apartments hitting the market over the next year or so.”
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