Sydney and Melbourne have shrugged off signs of a cooling market, with higher clearance rates fuelling predictions of a bumper spring rush driven by sellers wanting to net the same capital gains as their neighbours.
National clearance rates nudged higher to more than 75 per cent in the last week of August, according to RP Data Core Logic, with more than 1940 homes changing hands out of a total 2583 that went to auction.
Sydney and Melbourne lead the field, achieving strong clearance rates above 77 per cent, with both cities delivering substantially higher auction volumes on the previous year while other capital cities averaged a clearance rate of 65.3 per cent.
The results represent the second time in two weeks that rates have lifted after a short spurt of easing clearance rates that prompted some executives to call a market cooling.
“Its not so much that the market is cooling as it is an adjustment with some of the vendors who bought right at the top of the market trying to get that little bit extra,” Century 21 chairman Charles Tarbey said.
“Prices have risen so quickly that there’s more stock coming on but it’s coming on at a higher price, and that’s where (owners) need to be careful because buyers won’t always bite.”
Sellers demanding top dollar for homes bought at the market peak represented one factor driving clearance rates lower earlier in the month, but the level of competition and buyer interest indicated that spring was likely to be as frantic as last year, he said.
“Agents are still being hounded by buyers to sell before auctions because they’re worried they’ll miss out,” he said. “But we’ve also got agents who’ve taken homes off-market before auctions because they’re concerned there’s not enough competition. And that could be a function of price. But we’re also seeing homes selling above reserve and their neighbours watch on and think now’s a good time for them to sell, too.”
Experts expect figures released today to show capital growth to have slowed in August.
At the same time, there are signs that new-home sales have peaked, with the Housing Industry Association revealing sales eased 0.4 per cent during July, but remain at historic highs.
Ray White chairman Brian White agrees the market is likely to see spring emerge as another healthy season.
“You never beat a record in winter, but our figures have been quite spectacular,” he said. “Our record was $4 billion (in sales) in March and we have gone close to that throughout winter.”
Mr White said the spring selling season had been “exceptionally good” and more listings were coming to the market, particularly with interest rates likely to stay low.
This article first appeared in The Australian Business Review.