Lower interest rates to bolster rising Sydney auction market

Sydney’s weekend auction market continues to produce robust mid-winter results and although listings remain low, the current buyer momentum is set to be enhanced by falling interest rates.

The Reserve Bank’s decision to cut rates to a new record low 1.5 per cent is likely to bolster buyer momentum, with low interest rates already driving robust auction markets and rising home prices following a cut to the cash rate in May.

With banks passing on lower rates to mortgage holders and prospective home buyers, rising buyer activity and overall solid market confidence is set to be maintained through to spring.

Property-hungry buyers continue to fuel Sydney’s strong winter home auction market with buyers welcoming a lift in auction offerings last weekend that nonetheless remain in relatively short supply.

About 400 homes are scheduled to go under the hammer in Sydney on Saturday, which is similar to the 395 listed last weekend but well below the 847 auctioned on the same weekend last year. 

The average weekend listings have fallen from 517 to just 341 over the month and are well behind the 613 averaged over July last year. Auction listings in Sydney are down by 3403 over the first seven months of this year compared to the same period last year – a decline of 18.9 per cent.

The auction clearance rate last Saturday was 75.7 per cent, a result that was slightly lower than the previous weekend’s month high of 77.2 per cent and also below the 79.5 per cent recorded on the same weekend last year.

Auction clearance rates in the Sydney market increased sharply over the month of July to 72.6 per cent compared to the 69.2 per cent reported over June. This was the highest monthly clearance rate recorded by the market this year with buyer activity clearly on the rise over winter. 

Sydney’s city and east and south suburban regions will host the highest number of regional auctions this weekend with 53, closely followed by the inner west 52, the upper north shore 49, the west 39, the south west 28, the northern beaches 27, the lower north 25, the Central Coast 24, Canterbury Bankstown 21 and the north-west with 12 auctions.

Surry Hills is Sydney’s most popular auction suburb this weekend with eight, followed by seven in Blacktown, Randwick, Peakhurst and Hornsby each with five and a number of suburbs with four auctions listed including Ryde, Camperdown, Auburn, Leichardt, Dee Why and Chatswood.

Dr Andrew Wilson is Domain Group Chief Economist. Follow him on Twitter: @DocAndrewWilson