Several weeks of strong auction results show the property market has reached its bottom and is now starting to recover, boosted by interest from investors, property experts say.
David Airey, president of the Real Estate Institute of Australia, says he has previously been conservative about forecasting the bottom of the property market but believes it has arrived.
“I’ve been desperately trying not to call it but I think we’ve seen the bottom and we’re seeing investors coming back into the market.”
“I think there are two reasons for this. Firstly, there’s been an enormous change in consumer sentiment and one positive sign after another. Secondly, sellers have adjusted their prices to the reality of the times. Prices are much more realistic than they were, expectations are much lower.”
Airey says that the first home owner’s grant has provided support for the market, but that when the government’s extended grants disappear the market will still be able to survive on its own.
“First home buyers typically don’t buy at auction. Those who buy at auction are standard buyers in the second or third market situation, and they’ve probably sold something else before.”
“What we’re seeing in auctions is the main market improving, certainly above the $500,000 mark. The top end is still pretty flat above $2 million, and it’s harder to get finance there, but it’s starting to improve.”
Matthew Bell, senior economist with Australian Property Monitors, suggests that the strong clearance rates are a good sign the property market is on the mend, partly due to investors re-entering the market.
“We always thought that 2009 would see consolidation with slight growth, with better grown in 2010. I don’t think we’ll get back to 7-9% annual growth rates for a while, but we see property recovering later this year into 2010. In the last couple of weeks, people are starting to come back into the top 30% of suburbs in the higher end of the market.”
Adrian Jones, president of the Real Estate Institute of Victoria, says the results are encouraging and should give property watchers some hope.
“Statistically you never look at one weekend in isolation, but the trend has been encouraging for six to eight weeks. It does indicate the smart money is coming out of the mattress, and people are realising now is a good time to buy.”
Jones agrees that the market is no longer relying on first home buyers, and that when the government’s grants disappear the market will be able to survive.
“The impact of the first home owners boost has filtered through, but it has been also encouraged by some better economic signs, people are starting to straighten their back and look a little further forward.”
In Melbourne, REIV chief executive Enzo Raimondo says the weekend’s results are the best since August 2007, “and will provide anyone considering selling in spring with a great deal of confidence”.
The country’s second-biggest property market recorded an 86% clearance rate from 526 auctions, with sales passing $283.3 million.
In Sydney, the city recorded a 73% clearance rate with 127 properties selling at a total of $72.3 million. Brisbane recorded a 60% clearance rate with 12 properties sold, while Adelaide recorded a 62% clearance rate with sales totaling $4.7 million.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
