Property market strength does nothing to ease rate expectations
November 24, 2009
The property market remained strong last weekend, with seemingly no sign that interest rate hikes or fiscal stimulus reduction were having an impact on the booming property market.
Melbourne heats up
One could be forgiven for thinking that Melbourne’s property market, which has led the country’s capitals in terms of sales and price growth, may see a cooling in demand given interest rate rises, the reduction in the first home owner grant boost and an increase in the number of properties going under the hammer. But, alas, the Melbourne property sector is seemingly getting even stronger.
On the weekend, the city recorded a clearance rate of 81% as over 700 homes went up for auction. Of particular note is anecdotal reports of buyer desperation as the end of the year nears. The intense competition on auction day is seeing many people resort to buying homes pre-auction at a higher than advertised price and the demand-supply dynamics are likely to see this continue.
”We’ve never had more buyers wanting to buy properties before auction. They feel even if they have to pay a premium to get it off the market they have still had a win,” Craig Williamson, of Buxton Bentleigh, told The Age.
Four selling weekends remain before the end of year break and Melbourne is set to see a record number of properties for this year go under the hammer next week.
In Sydney, 262 properties were put up for auction with 197 sold, with a clearance rate of 71%. The total value of properties sold reached $155 million, with sales figures an improvement on last week.
In Brisbane, only 21 properties were put up for auction, with the volatile clearance rate improving to 43%. The consistent lack of auctions in the Queensland capital makes it difficult to gauge the strength of the market, but averaging out over the course of the past few months suggests that the market is in a holding pattern while Melbourne and Sydney trend higher.
The latest data has shown that Melbourne and Sydney property owners have received a greater return on investment than their Brisbane counterparts this year - although the Brisbane market has been far from downbeat.
Melbourne prices surged 8.4% in the year to September 30. Sydney recorded a 5.9% increase over the same period, while prices were up 5.6% in Brisbane. With clearance rates a key guide to demand it is likely that Melbourne prices have again trended further north that their eastern capital counterparts in the December quarter.