Tightened lending restrictions continue to impact clearance rates
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Jul 23, 2018
Tightened lending restrictions continue to impact clearance rates
While auction clearance volumes have improved on last week, tightened lending restrictions from the banks are continuing to impact clearance rates.
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Greg Hocking Holdsworth18 Page Street, Albert Park sold at auction over the weekend for $2.74m through Shane Siemers and Simon Gowling of Greg Hocking Holdsworth - Albert Park. As featured on Luxury List.
While auction volumes remain low week-on-week, the preliminary clearance rate has improved across the combined capital cities.
Auction volumes increased slightly over the week with 1,246 homes taken to auction across the combined capital cities, up from 1,178 last week.
The preliminary clearance rate was recorded at 60.6 per cent this week, after finalised clearance rates have held between 52 - 52.6 per cent for the last 3 weeks.
Source: CoreLogic
But the tightened lending restrictions by the banks continue to have a flow on effect to clearance rates.
"The banks are very nervous about lending at the moment, it is a very intricate situation and that is reflecting on clearance rates," Hamish Bowman, agent with Ray White New Farm told WILLIAMS MEDIA.
Sydney
A combination of a surge in properties selling before auction, and better sales for affordable apartments has lifted Sydney's clearance rate, data from CoreLogic shows.
There were 400 auctions held in Sydney over the weekend, returning a preliminary auction clearance rate of 61.3 per cent.
In comparison, last week there were 408 auctions held with a final clearance rate of just 46.9 per cent, the lowest clearance rate the city has seen since December 2012.
"The national property market lifted this week with an increase in clearance rates across the country," Real Estate Institute of New South Wales Deputy President, Peter Matthews, told WILLIAMS MEDIA.
8 Griffiths Street, Fairlight sold at auction over the weekend for $2.26m through Georgi Bates and Liz Allom of Cunninghams Property Balgowlah. As featured on Luxury List.
"Sydney agents continue to sell nearly the same auctions prior to those facing the competition on the day.
"Selling properties prior generally indicates bullish interest from buyers looking to close out the sale early and not risk competition on the day, however, it can also indicate a lack of strong interest in the property - so the sellers look for an early and sometimes more modest exit to conclude the deal.
"With clearance rates being excepted as an indicator of the strength of the market, buyer interest and inspections numbers remain at a reasonably healthy level, and whilst properties may not find a buyer in the first four weeks of the auction marketing, there are many deals being done post auction.
"Some buyers are even being forced back into the competitive mode, when the vendor's expectations meet the market and the sniff of a deal lures buyers to a playoff for the property, sometimes ending in an auction after the auction," Matthews told WILLIAMS MEDIA.
Melbourne
18 Page Street, Albert Park sold at auction over the weekend for $2.74m through Shane Siemers and Simon Gowling of Greg Hocking Holdsworth - Albert Park. As featured on Luxury List.
Melbourne was the busiest city for auctions this week, with 612 homes going under the hammer, returning a preliminary clearance rate of 62.3 per cent, compared to last week when 56.2 per cent of the 559 auctions were successful.
Over the same week last year, there were 833 auctions held in Melbourne, returning a clearance rate of 73.8 per cent.
“The clearance rate for Inner Melbourne suburbs was strong compared with other areas, at 66 per cent," Gil King, CEO of the Real Estate Institute of Victoria told WILLIAMS MEDIA.
“St Kilda East has been a star performer in the winter market and this trend continued over the weekend with all three listings cleared.
“So far this winter, St Kilda East has maintained a strong clearance rate of 96 per cent from 25 auctions.
“Brunswick also performed well this past weekend with an 83 per cent clearance rate and five properties going under the hammer," King said.
Jeremy Fox, Director of RT Edgar Toorak, told WILLIAMS MEDIA enquiry rates are very strong.
"The amount of people coming through houses is particularly high at the moment.
"One of our properties, 1 Fawkner Street in South Yarra, had 25 groups coming through on Saturday. While there may not be a lot of transactions coming through, enquiry is very high.
"The sheer volume of people attending open for inspections indicates there are lots out there looking.
In regards to "nervous" Sydney vendors that are selling prior to auction as they're nervous about the outcome at auction, Fox told WILLIAMS MEDIA "it's not as bad as everyone is saying"
"If you have buyers making offers and wanting to take homes off the market before auction, that is quite a good sign."
Brisbane
6 Saltbreeze Court, Sovereign Islands. Passed in with a vendor bid of $1.65m at auction over the weekend through Ross Kachel of Ray White Sovereign Islands. As featured on Luxury List.
In Brisbane, 91 homes went under the hammer, returning a preliminary clearance rate of 44.8 per cent, compared to last week when 37.9 per cent of the 70 auctions were successful.
Over the same week last year, there were 128 auctions held in Brisbane, returning a clearance rate of 46.4 per cent.
Hamish Bowman, an agent with Ray White New Farm, told WILLIAMS MEDIA the current lending restrictions are having an enormous impact on auction clearance rates.
"With the tightening in banking sector, it is very important for buyers to get their financing in order before they get involved with the buying process.
"Our number one question to buyers isnt 'what are you looking for', it is 'are you pre-approved' - without being pre approved buyers are unsure whether or not they can participate in the process, particularly if they want to go after a property they like. They may not realise it will actually take a month to get their finances in order, depending on their circumstances," Bowman said, speaking from the Inman Connect conference in San Francisco.
"I had a recent transaction with veterinarians who run a very successful clinic. Their financial situation was that their bank wasn't prepared to fund them, but we have a local mortgage broker who understood their situation and approved them, while the banks were quick to say no," Bowman said.
Meanwhile, across the smaller auction markets, the highest preliminary clearance rate was recorded in Adelaide where 75.0 per cent of the 48 reported auctions were successful.
Related reading:
Prestige market holds up amid one of lowest auction clearance rates in 10 years
"A smooth process:" despite market, quality homes continue to perform
Slowdown in clearance rates not necessarily an indication of the market
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