The final weekend of the spring property selling season has come and gone, and experts are underwhelmed as sales remained broadly in the line with the trend set in the first half of the year despite a slew of new listings hitting the market.
Most believe any improvement will not be seen until February or March, but also warn the European debt crisis could prolong the current trend if credit remains tight and banks roll back on home lending.
“That is the big danger for us,” says SQM Research managing director Louis Christopher. “The threat to the housing market is that banks may severely ration their home lending.”
Clearance rates in both Melbourne and Sydney remained around 50% over the past weekend, despite the number of listings increasing by several hundred.
APM economist Andrew Wilson says the result is indicative of the past season, with home buyers mostly waiting until they could get the best deal possible.
“Melbourne has certainly bumbled along the bottom of the market, and there’s no real sign of a pick up there. We’ve been slightly more optimistic about Sydney, but we’ve had such a mixed news period that it’s been extremely hard.”
Wilson says the fear of another recession and the ongoing debt crisis in Europe has kept buyers away, and that fear will continue into the next year.
“We’re starting to look like we’ll get some headwinds next year, but financial markets are looking at another restriction of credit, and that will be a big change if that occurs.”
“The potential in Europe is that the debt crisis worsens and the housing market is tightened. And that’s not good news. The upcoming budget outlook has talk surrounding it of reduced tax receipts for the Government, and that’s more negative news.”
While Wilson says while the season certainly hasn’t been bad, the lack of sales in proportion to the higher number of listings is disappointing.
“It’s still a pretty good picture, and we’ve had a reasonable, yet subdued, spring. It’s just the national financial situation at the moment which has put us on watch.”
According to the Real Estate Institute of Victoria, Melbourne recorded a clearance rate of 53%, with a total of 899 auctions. Chief executive Enzo Raimondo said the result shows how “evenly balanced” the market is.
Sydney recorded a 54.9% result, with Adelaide recording 16.7%.
Christopher says despite the macroeconomic situation, the market is ready for a recovery in 2012.
“We’ve had a rate cut, we’ll see if that helps. That movement could certainly stimulate the market next year.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
