The Australian auction market has seen a mixed bag of results this weekend following the Reserve Bank of Australia’s decision to cut interest rates last week.
In a sign of the times for the West Australian property market, a house purchased for $1.3 million in 2011 in the mining town of Port Hedland passed in at auction for just $360,000 this Saturday, according to the ABC.
The suburb, in the Pilbara region of WA, had experienced a huge demand during the mining boom from fly-in fly-out workers when its owner splashed out $1.3 million for the three-bedroom, one-bathroom fibro and iron house.
Property Observer reports the 1960s house sits in the heart of the West Australian mining town, within the business and commercial district. While it last traded four years ago for $1.3 million, before that it went for $870,000 in 2009 and last saw a price of $350,000 nine years ago in 2006.
A spectator told the ABC watching the home pass in was an “extraordinary event”.
RP Data’s Robert Larocca told SmartCompany the result was a very localised example of how the property market can be directly linked to the economy.
“When you don’t have a good job or good prospect for a job, you wont spend a lot of money on a house,” says Larocca. “What happened is a micro example that shows just how the economy has an impact on the property market.”
Across Australia, the national clearance rate was logged at 66.9% from 954 auctions, according to RP Data. This was slightly higher than this time last year, when 68.2% of homes sold under the hammer.
“At a national level it is very similar, almost a carbon copy of what we saw this time a year ago,” says Larocca.
Sydney again outperformed the rest of the country, starting the year off with similarly strong results to what it enjoyed last year. The city, which is fast becoming the auction capital of Australia, recorded a clearance of 80.5% from 402 auctions.
Melbourne logged a fairly subdued clearance rate of 61.4% from 246 auctions, which Larocca says was due to low volumes at the start of the year.
“We will wait a couple of week to get the full range of properties into the market before we start to ring any alarm bells,” he says.
Elsewhere, Adelaide hit a clearance of 61.1% and Canberra hit 62.8% off 94 and 70 auctions respectively, while Perth only sold five off the 25 homes that went under the hammer, according to the preliminary results.
Larocca says the market will have to wait a few weeks before the full impact of the RBA’s rate cut can be seen.
“The property market does not turn on a sixpence,” he says, although he believes a few buyers may have been inclined to spend a little more this weekend in response to the rates.
“Generally speaking, it takes about a month before you can make a real judgement on the effect of the rate cut on the property market.”
Kirsten Robb is a former journalist at SmartCompany. Previously, she worked at News Corp as a property reporter for Leader Newspapers and the Herald Sun, and holds a Masters of Journalism at Melbourne University.
