The real estate market is about as hot as it can get. People are saying things we never thought we would hear. Is Sydney's clearance rate about to crack 90%? basically what it means is that as a vendor, if you take your home to auction, you are going to sell it and get a price you probably could only have ever imagined. But let's recap what took place over the weekend.
Clearance rates: The following clearance rates were recorded over the weekend.
(Source: RP Data)
What does it means for the Australian real estate market?
A few strong markets are keeping up the rest:
Supposed talk of a bubble is premature. There are only two really strong markets that seem to be booming. That is Sydney and Melbourne. Whilst there may be some added heat in these markets, they don't represent the national average, with the weighted average closer to below 80%
Sydney is worlds in front of anywhere else:
The Sydney market is really incomparable to any other market in Australia. Week after week, properties are selling at prices well beyond vendors expectations. For some reason, people are confident that the Sydney market still has gas in the tank, and it doesn't look to be slowing down.
The RBA is at even more of a difficult crossroads:
The RBA has a serious developing conundrum, as every time rates are cut, people invest even more heavily in to debt, and borrowing the money for future assets, rather than spending money on the economy and increasing the purchase of goods and services.
Supply is not the concern, with nearly 1,000 auctions in Sydney and Melbourne:
The issue with the market is not a lack of supply, between Melbourne and Sydney there were 2,202 auctions- with clearance rates at the level they are, it is purely demand driven not lack of supply driven.
'Ugly suburbs' now the go to destination:
The trend of investing in growth and renting in hot markets is becoming common. It is making sense for fringe suburbs to be used as investment suburbs whilst people live and rent in the suburbs they want. Suburbs such as Prahran, Bondi etc are receiving strong rental yields, with investors looking at buying in more affordable areas. No longer can people buy where they want to live.
It will be interesting to see what happens with the next RBA meeting. The RBA is very conscious of people looking at strongly investing their money rather than spending it. They are attempting to keep a balance between expenditure on day to day goods, which keeps the economy going and people in jobs, rather than just having people invest all of their discretionary income. The next few months will be a very interesting time, to see if the market settles and even drops or if it continues from strength to strength. At the moment, if you have a property for sale, you hold the trump card as there are many buyers fighting for a way in to the market.
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.