Home auction demand rises in Australia, raising hopes of a market turnaround
2019-09-10
Home auction demand rises in Australia, raising hopes of a market turnaround
• Country’s housing stock stands at almost four times annual GDP, according to Australian Bureau of Statistics.
• Number of buyers purchasing auctioned properties has increased from a year ago.
Reuters
Published: 10:01pm, 22 Jul, 2019
Updated: 6:11pm, 23 Jul, 2019
Of 261 auction results reported in Sydney for the week, 190 found buyers, giving a clearance rate of 72.8 per cent – up from 46.9 per cent a year earlier. Photo: Bloomberg
Tumbling Australian home prices may have found solid ground amid the worst property downturn in a generation, as the real estate industry experiences a revival in auction demand, data showed.
Australia’s central bank has been closely watching housing market weakness as two years of price declines have eroded wealth, undermining consumer confidence and spending power.
The country’s housing stock is worth about A$6.8 trillion (US$4.8 trillion), according to estimates from the Australian Bureau of Statistics, almost four times annual gross domestic product.
Auctions are a bellwether of demand and real-estate industry participants hope buyer interest has returned, with clearance rates rising across state capital cities.
Buyers are reacting positively to cuts in mortgage interest rates after the Reserve Bank of Australia lowered its cash rate to a record 1.25 per cent and indicated the possibility of further easing.
Latest data from property consultant CoreLogic for the week ended July 13 showed increasing numbers of buyers are purchasing auctioned properties compared with the same time last year.
Of 261 auction results reported in Sydney for the week, 190 found buyers, giving a clearance rate of 72.8 per cent – up from the 46.9 per cent reported in the same week a year earlier.
Australia's RealTechX to scale up real estate technologies in Asia-Pacific
In Melbourne, the clearance rate reached 70.6 per cent, an increase on the 56.2 per cent last year.
Across all the capital cities, the clearance rate reached 65.4 per cent compared with 52 per cent in the same period last year.
Economist Martin North, principal of research firm Digital Finance Analytics, sounded a note of caution on the auction results, which are on lower volumes and are self-reported by real-estate agents.
“A massive spruiking operation is going on at the moment trying to talk the market up,” he said on Sunday, referring to salespeople’s showmanship.
The results suggest buyers are reacting positively to cuts in mortgage interest rates after the Reserve Bank of Australia lowered its cash rate to a record 1.25 per cent last month, and indicated the possibility of further easing.
Australia’s property market has the right catalysts for a rebound
Digital Finance Analytics’ North said borrowers must still repay the capital regardless of lower interest costs, and that high levels of debt relative to income was becoming a problem.
“People are going into retirement still with a mortgage,” he said. “It’s building risk into the system.”
North also said an oversupply of flats, concerns over their poor build quality and their wide use of recently banned flammable aluminium cladding is likely to impact the market.
• Country’s housing stock stands at almost four times annual GDP, according to Australian Bureau of Statistics.
• Number of buyers purchasing auctioned properties has increased from a year ago.
Reuters
Published: 10:01pm, 22 Jul, 2019
Updated: 6:11pm, 23 Jul, 2019
Of 261 auction results reported in Sydney for the week, 190 found buyers, giving a clearance rate of 72.8 per cent – up from 46.9 per cent a year earlier. Photo: Bloomberg
Tumbling Australian home prices may have found solid ground amid the worst property downturn in a generation, as the real estate industry experiences a revival in auction demand, data showed.
Australia’s central bank has been closely watching housing market weakness as two years of price declines have eroded wealth, undermining consumer confidence and spending power.
The country’s housing stock is worth about A$6.8 trillion (US$4.8 trillion), according to estimates from the Australian Bureau of Statistics, almost four times annual gross domestic product.
Auctions are a bellwether of demand and real-estate industry participants hope buyer interest has returned, with clearance rates rising across state capital cities.
Buyers are reacting positively to cuts in mortgage interest rates after the Reserve Bank of Australia lowered its cash rate to a record 1.25 per cent and indicated the possibility of further easing.
Latest data from property consultant CoreLogic for the week ended July 13 showed increasing numbers of buyers are purchasing auctioned properties compared with the same time last year.
Of 261 auction results reported in Sydney for the week, 190 found buyers, giving a clearance rate of 72.8 per cent – up from the 46.9 per cent reported in the same week a year earlier.
Australia's RealTechX to scale up real estate technologies in Asia-Pacific
In Melbourne, the clearance rate reached 70.6 per cent, an increase on the 56.2 per cent last year.
Across all the capital cities, the clearance rate reached 65.4 per cent compared with 52 per cent in the same period last year.
Economist Martin North, principal of research firm Digital Finance Analytics, sounded a note of caution on the auction results, which are on lower volumes and are self-reported by real-estate agents.
“A massive spruiking operation is going on at the moment trying to talk the market up,” he said on Sunday, referring to salespeople’s showmanship.
The results suggest buyers are reacting positively to cuts in mortgage interest rates after the Reserve Bank of Australia lowered its cash rate to a record 1.25 per cent last month, and indicated the possibility of further easing.
Australia’s property market has the right catalysts for a rebound
Digital Finance Analytics’ North said borrowers must still repay the capital regardless of lower interest costs, and that high levels of debt relative to income was becoming a problem.
“People are going into retirement still with a mortgage,” he said. “It’s building risk into the system.”
North also said an oversupply of flats, concerns over their poor build quality and their wide use of recently banned flammable aluminium cladding is likely to impact the market.
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