Auction results over the weekend will have agents and vendors pretty happy. Clearance rates have picked up to levels unseen in quite some time. The market reported record clearance rates across major cities with the following results:
- Sydney - 85.1%
- Melbourne - 77.8%
- Brisbane - 57.1%
- Adelaide - 72.9%
- Perth - 41.7%
- Tasmania- 71.4%
- Canberra- 73.3%
So what does this mean for Australian real estate?
- The RBA appear to have hit a good level with interest rates and supplying money. There are plenty of people out there wanting to snap up properties, and even notoriously tough markets with generally low clearance rates are starting to perform better, like Brisbane.
- People still think property is the smartest investment. Consumers have put there money back in to bricks and mortar. They have shied away from other investments, and are attracted to the guaranteed return and continued demand.
- Sydney is Australia's 'Blue Chip' city: No matter where you buy in Australia, it seems Sydney is the safest market. Market can be measured on supply and demand, and with demand outstripping supply, it is a fantastic place to own a property. Because of this, buyers keep pushing prices up.
- Brick and traditional homes drive demand: When you look at which type of homes are being snapped up, they have a theme. A lot of them are brick or classic homes, and have been established for a while. There is much more demand in established homes and suburbs compared to new estates.
- It's a good time to be a real estate agent: Agents are enjoying the market as demand is outstripping supply. A good agents is being able to have a strong supply of bidders at auctions, increasing the final sales price. It is not unusual to see campaigns with 50+ registered bidders pushing the final sales price up.
- We shouldn't get too ahead of ourselves: All of this renewed optimism needs to be taken cautiously considering the recent interest rate cuts. The market may be in some state of a false security as economic conditions haven't improved. The economy is predicting the current unemployment rate of 6.4% and at a 12 year high could increase, if this happens eventually the market could take a big hit.
- The rich get richer: It is hard to see new buyers entering the market with such a strong demand. Due to the attractiveness of owning property, property owners are hedging more money in to real estate, which for first home buyers is terrible news. It seems there will be a strong demand for the rental market, as owners continue to buy properties, first home owners are missing out, therefore they will stay in the rental market and rent these homes off the purchasers.
This three bedroom unit sold for $1.43 million in Coogee and still requires a lot of work.
Another home to sell and achieve an incredible result was in Melbourne, where this hockingstuart result achieved just under $1 million dollars for a family home in Reservoir. Five bidders fought it out and it was eventually purchased by a couple for $990,000.
If you are looking at buying in to the real estate market, it may be a very tough time to do so. The market is incredibly strong, and whilst it seems strong now, it may get stronger. ANZ Chief economist Warren Hogan stated "there is also some possibility that a third cut will become appropriate later in the year, should confidence and indicators of non-mining investment and household consumption fail to turn up sufficiently.”
With that being said, we could see interest rates at 1.75% and demand for buying hit an all time high! It won't be uncommon to see apartments selling for a million dollars, and homes going well over reserve.
About the Author:
Todd Schulberg handles all things marketing for Homely.com.au - Living and breathing property, Todd has a keen interest in the movements in the market and how agents can utilise new tools and technology in order to be more connected. Using all things social, Todd suggests different ways that agents can engage and think outside the square with their marketing approach.