Just when you thought auction clearance rates were high, both Sydney and Melbourne recorded above 80% clearance rates over the weekend.
Sydney property market
Sydney saw another weekend of clearance rates above 80%, this time clocking a rate of 84.4% from 628 auctions. That compares to a clearance rate of 80% last weekend for 674 auctions and a lowly 64.4% clearance rate from 796 auctions over the same weekend in 2015.
The spring selling season continues next weekend with around 800 homes expected to go to auction next weekend. As usual, inner city and suburbs close to the CBD continue to record clearance rates of above 90%. The median auction price was $1.21 million – 26.4% higher than the same weekend last year's $957,500 median.
Melbourne property market
A clearance rate of 83.7% on Saturday was well ahead of last weekend's 79% rate according to Domain. It was also well ahead of the 70.4% rate recorded on the same weekend in 2015. Over 1,200 auctions were held on Saturday compared to 993 last weekend, but behind the 1,479 held on the same weekend last year. Only 450 auctions are listed for next weekend in Melbourne due to the Melbourne Cup holiday break.
According to Domain, the median auction price in Melbourne was $872,000, 6.3% higher than the $820,000 price from last year. That's also an indication of how property prices continue to rise in Melbourne. It's yet more bad news for first home buyers, with lending to that segment in Victoria falling to 10.1% of all residential lending in the state – the lowest market share in over a year.
Apartment trouble?
The biggest concern still remains the oversupply of apartments with Morgan Stanley estimating a ~100,000 national housing oversupply will develop by 2018, but developers face rising settlement risks.
Stricter lending conditions particularly from the big four banks Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) could see many buyers struggle to find the financing. Morgan Stanley expects a number of projects to end up in the hands of receivers – which would be bad news for property investors.
