26 September 2023

Is the holiday over for Australia’s property markets?

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Michael Yardney* says there are signs that the fast rise in property prices seen last year may be slowing down.

We often say auction results are a great real-time indicator of property market sentiment and the record number of properties taken to auction over the month of January reflects a rush of sellers getting in to take advantage of the current high prices before the spectre of rising borrowing costs upsets the housing market.

Auction volumes are still building for the year but last weekend, the 2022 property auction year commenced on a positive note for most early-season sellers, with the high auction clearance rates around Australia – despite the ongoing COVID distractions and concerns – showing there is still strong momentum in the market.

Those who missed out on buying their home last year are experiencing an element of FOMO (fear of missing out).

And now there also seems to be an element of FOMO on the part of sellers, with some vendors thinking, “I’d better sell now or I’ll miss out on these high prices”.

While overall the auction clearance results were strong, they continued to reveal a significant disparity between capital cities, with the two-speed national housing market that emerged over 2021 once again showing up in Saturday’s results.

While Adelaide, Canberra and Brisbane clearly remained in boomtime mode, reporting more strong clearance rates at the weekend, Melbourne and Sydney, while still positive for sellers, continued to report rates well below the record auction clearance results of last year.

Sydney clearance rates solid but boom is over

Sydney reported a record season-opening day for auctions, with sellers still confident to engage the local market despite ongoing COVID concerns and distractions.

Sydney recorded an auction clearance rate of 65.8 per cent at the weekend, which was higher than the final 2021 Saturday auction day result of 63.8 per cent, but significantly lower than the boomtime 81.1 per cent recorded over the same opening weekend last year.

Sydney recorded a median price of $1,380,000 for houses sold at auction at the weekend, which was lower than the $1,580,000 reported over the final auction Saturday of 2021, but 10.8 per cent higher than the $1,246,000 recorded over the same weekend last year.

The auction clearance rate for houses was 67.6 per cent, with units lower at 53.8 per cent.

Solid start to Melbourne auction year despite COVID distractions

The Melbourne weekend home auction market commenced 2022 with solid results for most sellers, with clearance rates similar to the results reported over the final weekends of 2021.

Listing numbers were also positive for the season opener with sellers still confident to engage in the marketplace despite concerns and restrictions over the current COVID outbreak.

Melbourne reported an auction clearance rate of 68.5 per cent on Saturday, which was higher than the last weekend of December’s 66.3 per cent but below the 84.0 per cent recorded over the same weekend last year.

The 250 homes listed for auction at the weekend was predictably well below the season-ending record 1,480 set on 18 December last year.

Numbers were also lower than the 308 reported over the same weekend last year.

Moving forward, as the volume of auctions builds up, we will get a better indication of how the property markets will behave in 2022, but the early indication is that our housing markets are starting 2022 with a similar trend to how they finished last year.

I see property values still rising, but nowhere near as fast as they did this time last year.

*Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy.

This article first appeared at au.finance.yahoo.com.

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