Limited supply and low interest rates are lighting a fire under the property market as Sydney reported an auction clearance rate of over 85% last week – its highest rate in more than a year.
“[This outcome] clearly shows that for the right property, there is a significant demand,” said Kevin Brogan, director at CoreLogic, who considers the rate to be “robust.”
Nonetheless, Brogan also notes that the decreased volume of auctions held is a factor in the heightened demand – over 1,000 auctions were held this time last year, but there were less than 800 this year.
“There’s demand out there, which is a function of the low interest rate environment, and more confidence in the market, but there’s a relatively restricted supply,” he stated.
This supply is mainly concentrated in Sydney’s inner ring, with few dwellings being listed outside the city centre. Nonetheless, Brogan expects an increase in the supply of properties soon, although he does question whether demand will keep up.
For Louis Christopher, managing director at SQM Research, this late onset of the traditionally strong spring season is “abnormal.”
“We’re seeing a lot of pressure and few new listings. You normally see a seasonal rise. The spring season is coming in later, and that’s creating angst with buyers who want to buy a new home after they’ve sold,” he explained.
The situation of high clearance rates over a low number of auctions held seems to be the general case across the nation – the national rate rose by 5% compared to last year’s, and the volume of auctions fell from 2500 to 2062.
On the flip side, Melbourne’s clearance rate dropped slightly over the previous week from 78.3% to 78%, but has largely been consistent. Christopher attributes this performance to a population boom and an orderly property market.
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