Interest rates cool housing boom
The housing boom, which saw strong auction clearance rates throughout March and last month, has cooled significantly after six interest rate rises since October and a worsening European financial crisis.
According to Australian Property Monitors, auction clearance rates over the weekend in Melbourne and Brisbane were down considerably compared with the previous weekend, while Sydney and Adelaide showed modest gains.
Real Estate Institute of Australia president David Airey cited consecutive interest rate rises, tighter lending criteria and the continuing financial crisis in Europe as contributing to the softer clearance rate.
Sign up to the PerthNow Business newsletter
Start of sidebar. Skip to end of sidebar.
End of sidebar. Return to start of sidebar.
“In March, based on the figures, I predicted this was going to be a very strong year for real estate; now I have to review my thinking,” Mr Airey said.
“The simple fact is that the handbrake has been pulled up very suddenly.
“I would not call it a crisis of confidence, but the speculative end of the market has completely ceased and the enthusiasm has been dampened.”
In Brisbane, only $6.5 million of property sold at auction over the weekend, about half of the $12.8m auctioned the previous weekend. The city’s 21.7 per cent clearance rate was 14 percentage points lower this week.
In Melbourne, APM figures showed just $93.3m in property sold over the weekend, down substantially from $239.3m the previous weekend. The state’s most expensive property was a three-bedroom townhouse in Toorak that sold for $2.38m.
Figures from the Real Estate Institute of Victoria painted a healthier picture of the state’s property market, recording a clearance rate of 75 per cent. But REIV chief executive Enzo Raimondo said, “interest rates and a large number of homes on the market continue to keep the clearance rate below the pre-Anzac Day norm of over 80 per cent.”
In Sydney, the auction clearance rate was up 2.5 points to 63.2 per cent. The result was still down markedly on the 70 per cent clearance rate the city was recording in the first quarter of the year.
The number of Sydney auctions was also down from 409 the previous week to 331, with the most expensive property sold under the hammer being a four-bedroom home in Strathfield, which went for $2.35m.
Adelaide’s property market fared better, with the clearance rate up six points to 51.4 per cent over the weekend.