Auctions high and buyers still active despite winter chill

This weekend will likely be the trough of this year’s Melbourne auction market although typically lower mid-winter listings are being offset by continuing solid buyer demand

Melbourne is set to host just over 600 auctions this Saturday which will be lower again than last weekend’s 673 listings but well ahead of the 515 auctioned over the same weekend last year. Auction numbers are set to rise from this weekend as the market turns towards spring.

Yet another remarkable weekend for the west with auction numbers clearly the highest of all the regions with 152 scheduled.  Next highest and well below is the north east with 96 followed by the outer east 83, the north 70, the south east 66, the inner city 56, the inner south 45 and the inner east with just 33 auctions listed for this Saturday.

Reservoir is the most popular suburb for auctions in Melbourne this weekend with 14 followed by St Albans 12, Mt Waverley 11, Craigieburn 10, Greensborough 9 and Richmond, Werribee and Epping each with 8 auctions listed for Saturday.

Melbourne’s mid-winter home auction market continues to provide encouragement for sellers with another solid result recorded last weekend despite the distractions of school holidays.

Melbourne reported a clearance rate of 72.1 per cent last Saturday which was slightly lower than the previous weekend’s 73.5 per cent rate and the 75.7 per cent recorded over the same weekend last year.

The local market continues to hold up over winter with the usual seasonal decline in buyer activity yet to emerge with a significant fall in clearance rates.

New home building in Melbourne continues to fall and with current housing demand clearly ahead of supply, prices and rents can be expected to keep rising.

Latest ABS data reports that both houses and units have recorded significant declines in planned building activity this year so far with unit approvals down by 1652 or  13.5 per cent less compared to the first five months of last year and house approvals down by 169 or 1.6 per cent fewer on the same this year to date comparisons.

Total capital city home building approvals have also fallen significantly this year so far compared to last year, down by 4154 or 7.7 per cent fewer.  The capitals have recorded a decline of 2599 unit approvals, down 11.6 per cent with house approvals falling by 1555 or 5 per cent fewer than recorded over the same period last year.

Last week the Reserve Bank convened for its regular monthly meeting to determine the direction of official interest rates over June. Following better economic news this month, the Bank predicably decided to leave rates on hold at the record 1.5 percent where they have been since the last cut in August last year.

Optimism is now on the rise regarding the prospects of the national economy that primarily reflects a sharp fall in recent monthly jobless data and better retail sales numbers. Unemployment measures however are a lagging indicator of economic activity and trend retail sales remain relatively insipid. The recent sustained fall in planned home building provides some sobering news for the economy with more work still be done to lift out of the current doldrums.

Dr Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson join on LinkedIn and Facebook at MyHousingMarket.