What is driving Canberra’s strong auction clearance rates?

With January in our rearview mirrors, the Canberra property market has well and truly taken off with preliminary Domain data recording the city’s auction clearance rate at 90 per cent last Saturday. 

There were 41 scheduled auctions.

This comes off the back of the previous weekend’s clearance rate of 83 per cent out of 51 scheduled auctions. 

According to Domain Group economist Trent Wilshire, the preliminary results are a “clear sign that the market is very strong”.

“If clearance rates remain at this level, we are likely to see rapid growth in Canberra house prices,” he said.

In the Domain House Price Report for the December quarter 2019, Canberra’s median house price recorded an annual growth of 5.4 per cent to $788,621.

In 2018, clearance rates gradually declined over the year. However, that picked up last year with clearance rates increasing throughout 2019. By November, Canberra reached its peak clearance rate for 2019, at 66.5 per cent. 

In December, the year finished at 60.5 per cent, up 39 per cent on the previous year.

Wiltshire noted that while the figures draw from preliminary data, the capital has seen an uplift in previous results which have been driven by the lower interest rates.

Agent Cameron Whitnall of McGrath Woden had the highest recorded sale last weekend with a  four-bedroom house in Chifley selling for $1.135 million at auction. He echoed that statement, adding that the ACT government’s stamp duty changes – where first-home buyers in the ACT are no longer required to pay stamp duty on any residential property in the capital – are finally taking effect.

“We thought it’d go nuts last July, but there was a real lag,” he said.

“It took about two to three months before that kicked in … after that, the market was a lot stronger than it was earlier in the year and [2020] has kicked off with a bang.”

Whitnall also had the highest recorded sale on Saturday with a  four-bedroom house in Chifley selling for $1.135 million at auction. Whitnall noted that the million-dollar price point was the “new norm” for home-buyers.

“You get more bang for your buck in Canberra,” Whitnall said.

“People are buying with gusto and buying with enthusiasm and are not scared because as the old saying goes, ‘What’s expensive now is cheap in 10 years’ and Canberra has been like that for the last few decades.”

On the other hand, the most affordable home that sold under the hammer on Saturday was a three-bedroom property in Holt that sold for $496,000. Listing agent Simon Porter of Luton Properties Dickson described the sale as being at a “hotly contested” price point.

He noted that while first-home buyers are usually driving that lower-end price point, they are also competing with people “who want to renovate and flip”.

“We are seeing tradesman looking for opportunities to do that … where they can put their skills to use, create some equity and then resell it,” he said.