Sydney, Melbourne auctions bounce back
A two-bedroom home at Drummoyne in Sydney’s west that sold well above its reserve was one of many successful auctions on the weekend, as buyers return in force to the residential markets in Sydney and Melbourne.
Both markets posted strong clearance rates – Sydney at 70.2 per cent and Melbourne at 80.1 per cent – as the amount of listings picked up considerably.
The free-standing home at 126 Gipps Street sold for $1.51 million, $210,000 above its reserve as four of the 10 registered bidders fought for the prize.
Not far from the Drummoyne waterfront, the property on a deep 385 square metre block was part of a deceased estate.
“This was one the first auctions for 2016 in Drummoyne, and it seemed that many local buyers were curious to see what the property market is going to do this year,” said selling agent Adrian Sereni, of Warwick Williams Real Estate.
“There still seems to be a huge demand for properties in the $1 million to $1.5 million range.”
Sydney’s clearance rate over the weekend was achieved on 265 auctions, on CoreLogic RP Data figures. A week ago the clearance rate was 44.9 per cent from just 61 auctions.
Even so, the weekend action was still well short of the bumper 80 per cent clearance rates that were being struck during Sydney’s peak last year.
That frenzy fell off markedly toward the end of last year, with exhausted Sydney buyers only managing clearance rates in the mid 50 per cent range.
Melbourne’s weekend result came from 262 auctions. A week earlier, a 69.9 per rate was achieved from across just 151 auctions. One year earlier, the Melbourne market was on a 60.7 per cent rate from 255 auctions.
Property analyst Louis Christopher, from SQM Research, said this week’s volumes were large enough to give clear signal on the health of the market.
“It was a strong weekend overall.The auction numbers are going to keep building from here. Next weekend the volumes will be greater again,” he said.
“If we keep getting these type of clearance rates throughout the course of February, it put to rest the view that prices are going to fall as average for Australia.
“That won’t happen. This kind of clearance rate indicates the market is still moving up.”
Melbourne is set to out-perform Sydney this year, according to Mr Christopher, who has forecast price growth of 8 per cent to 13 per cent this year in that market.
Sydney prices are more likely to hit the lower end of the 4 per cent to 9 per cent growth forecast by SQM Research.
The weekend results follow fresh concerns over price growth and the strength of investor sentiment. National Australia Bank has predicted price growth of only 1 per cent over the year.
As well, there is uncertainty over the impact of Chinese capital controls on the market, although the Reserve Bank has played down concerns at a slowdown in foreign buyers.
Mr Christopher said anecdotal evidence showed Chinese buyers were still in the market, although foreign investor activity has slowed somewhat.
“But they are not the primary driver of the property boom. It wasn’t just Chinese investors, there were plenty of Australian investors who were involved.”
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