Spring has sprung with more Melbourne home auctions in the air and prices rising

This weekend marks the official beginning of the spring selling season as buyers and sellers increasingly engage the auction market to conclude transactions before Christmas.

Although this weekend is the calendar start to spring auctions, the last weekend in August typically signals the commencement of the selling season, reflecting decision-making by sellers at the end of the mid-winter school holidays in July.   

Last weekend Melbourne hosted a record August day of auctions with 1046 homes listed to go under the hammer. 

An extraordinary 4264 weekend auctions were conducted over August, a monthly record and an increase of 1075, or 33.7 per cent, over the 3189 conducted last August.

Auction numbers will track backwards this weekend compared to last with 860 listings, but that is still significantly higher than the 715 conducted over the same weekend last year.    

Inner suburban auction numbers are now rising sharply as spring approaches.

The most popular suburb for auctions this weekend is South Yarra with 21, followed by St Kilda with 18, Reservoir 16, Brighton and Glen Iris each with 13, and North Balwyn and Cheltenham each with 12 auctions scheduled this Saturday.

The inner south will host the highest number of auctions with 150, followed by the inner city with 137, the outer east 119, the west 117, the inner east 110, the north east 109, the north 71 and the south east 47. 

The auction market greeted the opening of the early spring selling season last Saturday with a strong result – bouncing back from the previous weekend’s weaker performance.

Melbourne recorded a 79.1 per cent clearance rate, up from 76 per cent the previous weekend and higher than the 77.7 per cent rate of the same weekend last year.  

The auction market clearly strengthened over August with an overall monthly clearance rate of 76.2 per cent, higher than the 75.2 per cent record over July and well ahead of the 71.3 per cent recorded over August last year.

With typically more higher priced homes selling over the pre-spring market, trend auction prices increased sharply in August to $820,000, up from $702,000 over July. 

Auction prices however are 13.1 per cent higher compared to $725,000 over August last year reflecting the level of underlying prices growth in the robust market.    

Although the Reserve Bank has unsurprisingly decided to leave official interest rates on hold over September, the chances of another rate cut this year have recently increased.

Rising unemployment and growing concerns over the prospects for the global economy, particularly China, may activate the RBA to stimulate the local economy, particularly as the bank has conceded that underlying growth may now be lower than previously forecast.

Latest Australian Bureau of Statistics data reporting near flat GDP growth over the June quarter reinforces rising pessimism over the future direction of the Australian economy and a downward bias for interest rates. 

A sharp fall in the Australian dollar this week is a positive however for Australia’s export-orientated industries.

Dr Andrew Wilson is Domain Group Senior Economist