The clearance rate remained stable again at 66% on 515 auctions reported to the REIV. 338 properties sold at auction with 266 of those selling on the day and 71 selling before auction. There were an additional 149 properties sold via private sale. This time last year the auction numbers were similar but the clearance rate was 88%.
The Reserve Bank will meet again tomorrow and decide the amount of the next interest rate rise with economists predicting this to be another 0.5% making the cash rate 1.85%. The Treasurer announced last week that he believes the peak of the inflation will be in the December quarter at 7.75% and then begin to gradually fall next year. He made it very clear that he believes things will get harder before it gets easier. However, there are signs that the tightness of global supply chains have stabilised and could be somewhat easing. It also appears that households are also responding to rising interest rates.
So what does this mean for property prices? Currently, we are in a stable property market (maybe slightly favouring buyers) with auction clearance rates sitting consistently in the mid 60%. Over the weekend, what we found interesting is was the number of buyers out at open for inspections looking at properties. Some opens we attended had HUGE numbers….some in excess of 50 groups with lines of buyers waiting to get through properties. This suggests that there are still many buyers in the market, some won’t do anything as they don’t have the confidence to purchase in the current market, other buyers will have already factored in to the interest rate rises and will be price sensitive, and others that will be ready and willing to pay to secure a property. These are the ones that could reap the rewards if we head into a market of falling interest rate rises next year.
Some auctions are achieving active bidding and others are passing-in. Many buyers are just waiting (hoping) for a property to pass-in and then negotiate. A good example of this is 50 Esplanade, Brighton which is a waterfront new home site on 903 sqm of land. The property passed-in on a vendor bid of $5,000,000 but since the auction, the agent has received multiple calls with buyers wanting to negotiate. Although this strategy can pay off at times, this type of negotiation can backfire as the negotiation environment is no longer transparent (like an auction is) and sometimes can even trigger an auction after the auction.
Have a great week.