The auctions market has remained relatively strong this weekend even with the Labor Day holiday in Victoria, with analysts surprised by Sydney’s uncharacteristically high result with a clearance rate over 60%.
But the result comes as new figures from SQM Research show stock levels rose by 5.3% across the country in February, with Sydney recording the largest month-on-month growth at 15.6% – a result that will keep pressure on price growth.
SQM Research managing director Louis Christopher says the weekend’s result is strong, but the rising stock levels will keep any growth subdued for now.
“When you make an adjustment for the unreported figures, you still get a good result at about 56-58%, so it was a reasonably strong weekend.”
“In terms of the last few weekends, they’ve ranged from the low 60s down to the low 50s. So this is conducive of a market that’s not falling by any means, but it’s not really taking off either.”
SQM’s figures show national stock levels have risen 46.1% since February 2010, and are now at a two-year high. While Melbourne recorded the highest stock levels at 37,911, followed by Brisbane at 28,937, Sydney actually recorded the highest month-on-month growth at 15.6%.
Christopher says the result shows there is enough supply to fuel demand, and that lower price growth is simply a symptom of buyers being scared due to higher interest rates.
“The clearance rates that we are seeing a signal that in Melbourne and Sydney at least, there is no crash occurring. What we are seeing is a stable market, it’s not racing, or falling, but moving at a considerable pace.”
That assessment is at odds with some analysts who believe price growth in Sydney will reach up to 10% this year. Last year, John McGrath of McGrath Real Estate told SmartCompany that growth in certain sections of the city would reach that amount.
But Christopher disagrees.
“I think that assessment is optimistic. We’re not going to see that type of growth unless we see an interest rate cut in the next two or three months, and that’s unlikely.”
The sheer amount of stock on the market will also keep price growth down. Nationally there were 278,939 houses on the market in February, up from 265,848 in January.
For units, there are now 64,446 on the market, compared to 60,346 in January. Sydney has the largest amount of units available, with 11,611 on the market.
Christopher argues the large amounts of stock cannot be explained by “seasonal influences”, but instead says the market downturn is keeping stock availability high.
“It is clear there is an abundance of stock, in Sydney as well,” Christopher says.
Across the rest of the country, clearance rates held up quite well – especially in Melbourne where the amount of stock on the market dropped due to the Labor Day holiday. There were 202 auctions listed, and 51 out of the 80 reported sold, indicating a clearance ate of 60%.
The REIV result was higher – chief executive Enzo Raimondo said in a statement there were 148 properties sold in total out of 218, resulting in a rate of 68%.
“Next weekend volumes return to a high number with around 950 auctions expected followed by 940 the weekend after,” he added.
Adelaide recorded a 56.5% clearance rate with 13 properties sold, while Brisbane recorded a rate of 21.1% with four properties sold.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
