1,083 auctions were reported to the REIV on the weekend resulting in a clearance rate of 75%. 586 sold at auction, 225 sold before auction, 1 after auction and there were an additional 178 private sales. This time, last week, there were 1,244 auctions reported producing a clearance rate of 76% and this time, last year, 928 auctions with a final clearance rate of 79%.
With the high volume of sales happening around the state, the talk of interest rate rises did little to deter buyers from putting up their hands at auctions over the weekend. While the major banks are busy trying to read a crystal ball to predict when and how many interest rate rises there will be, the media are starting their usual negative reports with predictions of falling property prices.
The reality is that most property buyers we have spoken to over the years recognise that interest rates were going to rise at some stage. Whilst we have all enjoyed record low interest rates, we also knew that this was not forever and at some point, interest rates would have to rise.
Yes, this is likely to slow down price growth, yet we already know that the price growth that we have seen over the past 18 months has not been sustainable. Buyers also recognise this. It also seems the flood of properties that were going to come on to the market as we got back into some kind of normal life, have now been sold. Landlords that were thinking about selling their investment properties (due to being impacted through Covid) also have mostly put their properties on the market. So whilst we may see a period of some buyers becoming a little bit more cautious, I do believe we also may see a period of the amount of properties on the market reducing.
In addition to the imminent interest rate rises, we have a federal election now scheduled for May this year. The federal election in 2019, had a tremendous negative impact on the property market as the Labor Government pushed to abolish negative gearing. This policy has now been dumped and it appears the federal election this time around should have minimal impact on property prices.
On Saturday, I attended a very competitive auction at 18 Albion Street, Balaclava. An updated, well positioned, three bedroom, two bathroom period home. The property was quoted at $1,800,000 to $1,900,000 prior to auction with bidding starting as soon as the agents preamble ended. Four bids by four different buyers started the auction off where the property jumped to $2,000,000 in the blink of an eye. The agent declared the property on the market (likely reserve was under $2,000,000 as the bidding did not allow the auctioneer to announce it any earlier). Three more bidders participated (seven in total) pushing the price to $2,170,000
Have a great week.