Auction buyers undeterred by rising interest rates and higher unemployment

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Mar 20, 2017

Auction buyers undeterred by rising interest rates and higher unemployment

The auction clearance rate across Australia's capital cities rose last week to 76.2 per cent, despite the prospect of interest rate rises and job losses.

This property on Drumalbyn Road, Bellevue Hill, Sydney, sold at auction last week.

The auction clearance rate across Australia's capital cities rose last week to 76.2 per cent, despite the prospect of higher interest rates and a rise in the unemployment rate.

The result compares with the 75.1 per cent reported the previous week, and 68.8 per cent reported in the same week a year ago.

A rise in the number of properties going to auction did not constrain clearance rates. A total of 2,844 homes went to auction on the weekend, up from 1,473 the previous week, but lower than the 3,540 properties that went to auction in the corresponding week last year.

Auction clearance rates rose in each capital city, but, as always, varied. Sydney recorded the highest preliminary clearance rate at 83.9 per cent. Canberra came in next with 76.6 per cent.

Source: CoreLogic.

"Another strong weekend for Sydney auctions results with consistent clearance rates over 80% for four weeks in a row," John Cunningham, president of the Real Estate Institute of New South Wales told SCHWARTZWILLIAMS.

"Sydney is showing no signs of slowing down and with a slight increase in stock evident in the past two weeks the strong pre-Easter market appears to be ready to brace for a few more super Saturdays ahead," he said.

Greg Troughton, CEO of the Real Estate Institute of South Australia, told SCHWARTZWILLIAMS, "People are finding out about the great big South Australian secret – our affordability. 'Most affordable mainland state' is our catch cry." Adelaide's clearance rate came in at 64.7 per cent.

"Listings remain tight," said Troughton, saying that low listings will keep clearance rates buoyant.

"Sydney real estate seems to have no bounds as far as buyers are concerned so until something happens with interest rates going upwards we will have to play wait and see," said Cunningham.

Last week interest rates did begin to turn, and there were a number of other developments that could have taken some of the wind out of property markets.

During the week Westpac announced it will increase its variable home loan rate for owner occupiers by 3.8 basis points. The move came hot on the heels of NAB's announcement that it will lift its standard variable rate for owner occupiers by 7 basis points.

In addition, last week's Australian Bureau of Statistics report that the unemployment rate had risen from 5.7 per cent to 5.9 per cent in February, could have dampened clearance rates.

Also last week, real estate recorded its lowest ‘favoured’ rating as the wisest place for savings since records began in 1973, according to the Westpac/Melbourne Institute Survey of Consumer Sentiment.