- This weekend's clearance rate was based on 2,393 capital city auctions, down 27%.
- SQM warns if the RBA does hike the cash rate to 4%, conditions could deteriorate.
- Vendor nerves remain a factor with some hesitant to list their property at this time.
The Australian housing market is currently enjoying a resurgence despite expectations the Reserve Bank of Australia may hike interest rates again next week.
Auction clearance rates and prices have rebounded, indicating that the market is experiencing a purple patch.
This weekend, the preliminary auction clearance rate was 69.7%, up from last week’s final clearance rate of 67.2% according to CoreLogic.
This weekend’s clearance rate was based on a total of 2,393 capital city auctions, which was a 27% decrease in volume from the 3,386 auctions held in the same week last year.
CoreLogic’s daily dwelling values index is also increasing – up 0.2%, driven by a 0.4% rise across Sydney.
False dawn
While this appears to be a positive trend, SQM Research managing director, Louis Christopher, has warned that if the RBA hikes the cash rate to 4% like many experts are now predicting, conditions could deteriorate once again.
“We need to be prepared for the possibility of a ‘false dawn’ in the market where would-be buyers believe the market is turning, but then we see a new weakness in the market due to additional cash rate hikes”, Mr Christopher said.
Strong clearance rates to continue
Real Estate Institute of NSW, CEO, Tim McKibbin said, “In spite of the uncertainty in the market, clearance rates have been strong in recent weeks, and this should continue.”
Mr McKibbin said, “Vendor nerves remain a factor with some hesitant to list their property at this delicate economic time.
“However, vendors who do proceed with reasonable expectations are attracting significant interest.
“Buyers are wary of the further rate rises that are expected, but the fact remains that there are too few homes to satisfy demand,” he said.
Bubble will burst eventually
Mr McKibbin said the Australian property market’s current buoyancy is not expected to last: “The Reserve Bank of Australia is expected to announce another interest rate hike at its next board meeting, increasing the pressure on borrowers and renters alike.
“After all the month-on-month rate rises, the Reserve Bank has been in the spotlight recently. This will intensify next week when the Board meets again,” he said.
It appears likely the RBA will pile on more pain, and the banks can be expected to stay true to form and pass any increase on quickly Mr McKibbin said: “For borrowers, the challenging environment will continue. It’s the same for renters.”
