- This spring selling season is set to be different, despite macroeconomic changes
- The Reserve Bank is expected to face heavy scrutiny
- Clearance rates have remained stable despite higher interest rates
With interest rates rising, as is the lack of housing affordability, no one knows exactly what is going to occur.
One thing that is known, however, is that spring typically sees an increase in buyer and vendor activity.
Real Estate Institute of New South Wales (REINSW) CEO Tim McKibbin expects a ‘steady stream’ of reasonable results for vendors alongside opportunities for value for buyers.
However he expects the Reserve Bank of Australia (RBA), and in particular its governor, Dr Philip Lowe, to face heavy scrutiny over the coming weeks.
“The Reserve Bank is coming under fire from some quarters as the weight of month-on-month rate increases hits home for many mortgage holders.
“The Governor has been clear on the rationale for the increases but insists that incoming data will guide how much further, and how quickly, rates will need to rise before the RBA deems inflation back under control.
“This uncertainty of the timeline and the magnitude of rate increases fuels uncertainty elsewhere, including in the behaviour of property buyers and sellers.
“It speaks to the resilience of the market that the level of transactional activity remains robust.
Despite this, Mr McKibbin expects that major indicators to remain stable in the weeks ahead.
“Clearance rates, for instance, are holding firm despite the increase in available stock.”
Data confirms Mr McKibbin’s remarks.
Sydney
As SQM Research data shows, clearance rates have been on the decline for better part of the past year. However, since May, the clearance rate has hovered around 40%, with the number of total auctions similar to the same period over the past few years, and higher than the past few weeks.
Melbourne
For Melbourne, the clearance rate has been far less volatile the past few months than it has been seen the series began. However, it should be noted, Melbourne saw some of the longest lockdowns in the world throughout 2020 and 2021, which severely impacted both the number of listings and clearance rates.
Since April, the clearance rate has been in the higher 40s. The total number of auctions has been fairly stable since June, although listings are far lower than hey were throughout much of 2021, despite several lockdowns. Nonetheless, listings have increased over the past month.
“Agents report strong demand from buyers rightfully careful not to over-extend themselves. It’s a market in which the best agents are proving their worth,” concluded Mr McKibbin.
