412 auctions were reported to the REIV last weekend resulting in a clearance rate of 71%. 224 properties sold at auction, 68 sold before auction and 120 properties passed in. In addition there were 242 private sales (a strong number), which is very much a reflection of the current market where some vendors are opting to sell their properties via private sale, off market or expressions of interest.
The Reserve Bank of Australia met for the first time for 2023 and raised interest rates by 0.25%. They have also warned there are atleast two more to come but appear to be favouring a slow and steady approach rather than any further large hikes. The current cash rate is 3.35% and they have implied that it could peak at 3.85% or just above. To put things in perspective, these rates are still low. Property owners have been very fortunate for the past 10 years to have experienced record low interest rates.
It is predicted that upto 800,000 mortgages will come off lower fixed term rates onto higher variable rates this year. Will this see a flood of properties coming onto the market? There is no doubt there will be some casualties from interest rates rising but one could argue that some of these owners have already put their properties on the market and sold. Many will try and maintain their home and/or investment property(ies) and some will do so by cutting back on non-essential purchases and reducing their spending budgets. However, if someone was in real financial stress, one would think their exit plan would already be in play. Stock levels are currently very low and we believe this will continue to be the case. Many property owners (and buyers for that matter) will stay in a holding pattern until the peak of the interest rate rises arrives.
Overall, there is still a level of uncertainty in the property market, buyers are cautious, BUT we again saw high numbers of people at open for inspections and some big crowds at auctions. 71% clearance rate is an improvement of last years clearance rate but this is being held up by low stock numbers. We feel buyers are circling, sussing out the market, doing their research, and some are likely waiting for the peak of interest rates to come. Some buyers however have factored these interest rates into their budget and taking advantage of the buying conditions where currently there are less buyers in the market.
1/2a Tiuna Grove, Elwood went under the hammer on over the weekend which is a well located 2 bedroom, 2 bathroom, 1 carpark apartment attracted downsizers bidding at auction. The property was quoted $1,000,000 to $1,100,000 prior to auction and sold well above its reserve at $1,165,000. The property last sold in 2019 for $1,000,000.
119 Hotham Street, Collingwood also went to auction and is a fully renovated, 3 bedroom, 2 bathroom single fronted home with no carparking. The property was quoted at $1,410,000 to $1,550,000 prior to auction and sold for $1,820,000.
Have a great week.