Auction markets remained subdued at the weekend, with experts expecting similar results until the traditional spring selling season kicks off.
In Melbourne, the Real Estate Institute of Victoria said the clearance rate was 60% from 577 reported results, with 348 properties sold. Chief executive Enzo Raimondo said in a statement that “demand for homes… remained consistent” and added “conditions will continue to favour buyers”.
Sydney recorded a 54.5% clearance rate with 168 properties sold and a total value of $126.6 million, while Adelaide recorded a 36.4% result. Brisbane only recorded an 8% result, with only two properties sold.
But the weakness isn’t limited to just the auctions market – Australian Property Monitors economist Andrew Wilson says activity in the private sales market is also down as well, providing sellers with fewer buyers and less competition.
“I think sales are still patchy, but of course it’s very location specific and specific to price scales. In the middle to top end, I believe it’s quite weak there.”
“There’s probably some reasonable action in inner-city suburbs that are in the $700,000 to $1 million bracket, in both Sydney and Melbourne. And while there is always action in the lower end of the market, there’s certainly not the activity that we had a year ago.”
Wilson says while there are still a number of first home buyers prowling the market, affordability issues including the prospect of rising interest rates are keeping them away, resulting in fewer prices for auctions and limited numbers of interested parties for private sales.
Activity in the mid-range market, with prices of about $700,000-$1 million and in locations within five to eight kilometres outside of both Sydney and Melbourne, is relatively strong.
But apart from those high-density areas, Wilson says private sales aren’t performing much better than auctions – there are just too few buyers and too many properties.
Last week SQM Research revealed stock in Melbourne had doubled over the past year, and grew by 68% across the country, providing downward pressure on prices.
“We are definitely seeing the onset of the winter season now,” he says, “and this is going to continue to subdue the recovery process.”
“Now, I think investors will be waiting for spring.”
The long-term outlook recovery is a view also held by Real Estate Institute of Australia president David Airey, who believes the longer football season (the Grand Final will be held in October this year) will mean private sellers will have to wait awhile before seeing a return in demand.
And the longer they wait, the more chance the RBA will continue to raise rates, after last week it pointed out higher inflation figures will require a response.
“That extra football season is going to mess things up for some people, so I do think the sellers will be anxious to get on with everything.”
“The buyers are out there, but as the story has been for the past while, they are being more selective. The more expensive the properties are, the more difficult it is to sell in this market.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
