Low listing volumes are putting sellers in an extremely comfortable position and we are seeing very clear and consistent signs of recovery in the market.
It’s this turnaround, as well as further improvements in auction clearance results, that is likely to lead to an increase in volume. However, at this stage it appears, generally, sellers do not feel the rush to list their properties with the high clearance rates putting them in control of the market.
Auction clearance rates in Sydney and Melbourne are now trending, for interim results, in the 70s and 80s over the past four weeks and final clearance rates in the 70s for that period. This is significantly higher than the clearance rate in the mid 50s a year ago in those capital cities.
We are also seeing, from the independent source of the Westpac-Melbourne Institute, significant improvements in consumer sentiment in relation to house price expectations and time to buy a dwelling indices.
A combination of the election results, RBA interest rate cuts with at least one further cut on the horizon and possibly another next year, APRA's changes to the floor assessment and tax cuts delivering more funds to households, all contribute to the confidence in the market and, consequently, for higher clearance rates that were also well connected with higher prices.
The recent auction clearance rates and improved consumer confidence are creating a very clear trend, that will consequently lead to price increases and a rise in volumes, as sellers expect stronger demand for their properties and, therefore, are more confident to put them on the market.
Basically, what we are seeing is improving confidence, improving clearance rates and improving prices. In fact, according to CoreLogic data, in July 2019, dwelling values increased across all capital cities except for Adelaide, Perth and Canberra.
This shows that sellers are in a good position, they see improvement in the market, and they are in control of what happens next. Generally, both Sydney and Melbourne are performing really well, especially Sydney in recent weeks.
The key thing we are seeing is very consistent and strong results, particularly, but not only, in the high end of market.
This is a good trend and with the recent rate cuts by the RBA, the high likelihood of another this year, and potentially one in first half of 2020, this are looking extremely positive.
Demand for housing and housing finance are also showing very clear signs of improvement.
With the interest rate falls and recent changes in the floor assessment, combined with serious competition between banks and non-banks making it easier for borrowers, particularly owner-occupiers to refinance and reduce mortgage repayments, there’s negative pressure to sell because vendors see the market recovering.
Often people think if there is low volume, the market it poor and high volume means it’s strong, but that's not necessarily the case. It really depends on the context.
CEO / Founder
RiskWise Property Research