Andrew Wilson: Canberra auction market produces near-record sales in May

The robust Canberra home auction market continues to strengthen, producing near-record results for May sellers.

Canberra recorded an overall home auction clearance rate over May of 70.1 per cent, which was well ahead of the 66.3 per cent reported over the previous month and significantly higher than the 61.5 per cent recorded over May last year. The May result was the second highest on record for that month and just behind the 73.7 per cent reported over May 2017.

Canberra recorded a median auction price of $721,000 over May, which was 1.5 per cent higher than the $710,000 recorded over April and 7.6 per cent higher than the $670,000 recorded over May 2016.

Belconnen was the top performing Canberra auction region over May, with a clearance rate of 80.5 per cent and also the highest sales at 62. Next highest was Canberra Central, with 72.5 per cent, followed by Gungahlin 70.6 per cent, Woden Valley 69.4 per cent, Tuggeranong 59.5 per cent and Weston Creek 47.6 per cent.

Next week the Reserve Bank will convene for its regular monthly meeting to determine the direction of official interest rates over June. Although the Bank is more likely to leave rates on hold again at the record low rate of 1.5 per cent, the odds are narrowing for a near-term cut given the continuing underperformance of the national economy.

Although the national jobless rate has improved, underemployment remains a challenge in a continuing low incomes growth economy. This is predictably being reflected recently in declining retail sales with ABS data recording latest trend growth at the lowest levels in nearly five years.

Planned residential building is also declining, with ABS building approvals down by 4.6 per cent this year so far compared to the same period last year.

And, most sobering, the national economy may record yet another quarter of negative growth over March, following the decline recorded over the previous September quarter. Surely this will offset the recent focus by the Bank on the direction of Sydney house prices.

Dr Andrew Wilson is Domain Group chief economist. Twitter: @DocAndrewWilson Join on LinkedIn and Facebook at MyHousingMarket.