A Reserve Bank interest-rate hike has been followed by one of the strongest preliminary clearance rates in weeks from Melbourne’s auction market.
Melbourne’s auction market yesterday battled through the aftermath of the nation’s fifth interest-rate hike this year to a surprisingly strong 60 per cent clearance rate.
It’s an unexpected middle finger to Reserve Bank governor Michelle Bullock who warned that the nation would feel poorer and face recession like conditions in the year ahead when she announced a 0.25 per cent rate hike on Tuesday.
It’s even more surprising given that hike is also expected to wipe more than $11,000 from an average earner’s borrowing power for a single income, and closer to $22,500 for a dual-income household.
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With similar cuts from the previous four increases earlier in the year, Canstar has estimated borrowing power for a single-income household at an average $108,650 is now down 9 per cent — or about $47,000 since the first rate rise in February, and about $95,000 for two-income families.
Realestate.com.au data shows yesterday’s 60 per cent clearance rate came from 428 results, and was the strongest since September 12.
Seven days ago the figure was 53.4 per cent from 380 results, and this week’s result is the strongest since September 12.
84 Gatehouse St, Parkville, was the days top disclosed auction result, with a $2.68m sale.
However, Real Estate Institute of Victoria chief executive Toby Balazs said yesterday’s clearance rate was “surprisingly good” given the Reserve Bank decision just a few days prior, but did not change the fact that whoever formed government later this year would need to ensure stimulus was provided to get property transactions where they should be in terms of volumes — with this week’s numbers significantly below historic norms for spring.
“But I think the interest rate rise will probably make the clearance rate more challenging to improve between now and the end of the year,” Mr Balazs warned.
“I would be surprised if we see a further notable improvement in auction clearance rates, though I would welcome that.”
Ray White chief auctioneer Luke Banitsiotis said any improvement in the clearance rate at this point was likely a sign of improved understanding of the state’s new auction laws, both among home sellers and agents.
A $2.435m sale for 26 Stradbroke Ave, Heidelberg, also landed it a spot on the day’s auction result leaderboard.
Mr Banitsiotis said the clearance rate had looked “a little scary” following the implementation of the new auction rules, but that signs of improvement would hopefully lead to more confidence in auctions at large.
“But marginal gains are just the market adjusting to the declared reserves, with agents getting better at using them and buyers getting better at interpreting them,” he said.
Interestingly, the auctioneer added that there was a new trend emerging of vendors who passed in their homes responding to the tough market conditions by lining up a follow on auction three weeks later with the reserve revised downward to reflect buyer feedback.
After calling such an auction yesterday in Seaford, which ended with a sale a few weeks after the home initially failed to win over buyers, he said the proof was in that sellers could get results — it was just a matter of being willing to work with buyers.
In Melbourne’s west, 58 Hannan St, Williamstown, became the city’s third strongest sale.
After calling such an auction yesterday in Seaford, which ended with a sale a few weeks after the home initially failed to win over buyers, he said the proof was in that sellers could get results — it was just a matter of being willing to work with buyers.
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