The auctions market is continuing to struggle along despite the interest rate cut, with the nation’s largest markets recording clearance rates in the low 50s, suggesting activity will remain subdued for the next few months.
Industry experts also suggest the real test will come next week when hundreds of new listings are expected to be listed, although success is not expected as consumers remain cautious.
Analysts suggest the lack of activity is a combination of low confidence, prices remaining too high, and the time of year – listings usually fall in November-December.
“Fewer and fewer listings come along this time of year,” SQM managing director Louis Christopher says. “It’ll start quietening down until the last weekend before Christmas, and then the market will just shut down.”
“We’ll have to wait until February to see what happens, but I expect it’ll open with a much higher clearance rate.”
This weekend’s results have been particularly poor. According to the Real Estate Institute of Victoria, Melbourne recorded a clearance rate of 53%, with chief executive Enzo Raimondo saying the result is typical of “consistently moderate levels of demand”.
There were 668 auctions this weekend, of which only 352 were sold.
Sydney recorded a clearance rate of 52.4%, with 518 properties listed, while Adelaide and Brisbane recorded rates of 34.5% and 12.5% respectively.
Christopher says he believes the results are actually lower than this, given both REIV and Australian Property Monitors use a fraction of reported results. He suggests clearance rates in Melbourne could actually be in the 40s.
“This would be suggesting house prices are still falling in Melbourne, and that we haven’t had too much of a kick yet from the interest rate cut.”
“Listings will peak next week, or the week after next, and from then, it’s just going to decline through the end of the year.”
Next week Melbourne is set to see its biggest auctions week of the year, with over 1,000 properties listed.
APM economist Andrew Wilson agrees, saying both Melbourne and Sydney have been moving sideways for much of the year. And although he notes that confidence and conditions may be improving, consumers simply aren’t responding to the property market due to a combination of factors.
“Things have stabilised in terms of unemployment, and retail sales have increased as well. But I think it still reflects the mindset of the consumer.”
“Certainly next week will be the big test for 2011. And over summer, there should be enough indicators to show that buyer activity could improve.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
