Though the number of properties going to auction has edged higher over the spring months, supply is not keeping up with demand. Clearances rates are at a high for the year, and prices are heading into the stratosphere.
Auction clearance rates in Sydney on the weekend were 85.6%, according to CoreLogic, and in Melbourne were 81.8%. The weighted average of the combined capital city auction clearance rates was 80.2%, a high for the year so far.
Spring is seeing a lift in the number of properties going to auction market; the number of homes put to auction last week was 2,641, up from 2,443 previous week.
But low interest rates is driving strong demand, and the high clearance rates suggest that supply is not keeping pace with demand.
The exuberance in the market has led to Treasurer Scott Morrison saying the housing market is “getting away from people”, according to The Australian ahead of a speech at the Urban Development Institute of Australia.
“Buying a house without a dual income has become an almost unreachable goal,” he is quoted as saying.
A three-bedroom terrace at 115 Beattie Street, Balmain sold for $2.3 million on the weekend. Andrew Liddell, of BresicWhitney said there were four registered bidders at the auction and the vendors were "thrilled" with the result.
Liddell said the strong result is an indication of the lack of good quality properties on the market.
"Over the last three months its been a simple case of supply outstripping demand," he said.
Liddell added that quality properties with appealing features were achieving particularly strong prices.
"Good quality houses that offer tangibles, like space or car parking, attract a premium," he said.
Angus Gorrie, of McGrath Coogee, sold a two-bedroom apartment in Rose Bay for $1.2 million on the weekend. Gorrie said there was so much interest in the property, the vendors decided to bring the auction forward a week. There were 16 registered bidders.
Gorrie said that a similar apartment in the same building sold for $850,000 in May, giving an indication of how far prices have risen over recent months.
See also:
Auction clearance rates cool as spring volumes bloom
Australian homes with a $1 million price tag around Australia