Rate cut to fuel rising Melbourne auction market

The Melbourne mid-winter home auction market continues to deliver seasonally strong results for sellers and with interest rates now falling has the clear prospect of maintaining rising momentum into spring.

This weekend Melbourne will again host well over 600 auctions, similar to the 675 listed last weekend but well below the 950 auctions conducted over the same weekend last year.

The inner south will host the highest number of regional auctions this weekend with 101, followed closely by the west with 100, the north east with 86, the inner east’s 79, the inner city has 76, the outer east 66 the north 47, and the south east with 40.

Preston is the most popular suburb for auctions this weekend with 10, followed by Kew, Richmond, Brighton and Hawthorn East, each with nine, and Reservoir, North Balwyn and Eltham will each host eight.

Melbourne recorded yet another healthy home auction clearance rate for sellers last weekend with the market showing no sign of waning over winter.

Last Saturday’s 75.7 percent result was higher than the previous weekend’s 74.2 per cent rate, but below the 79.3 per cent recorded over the same weekend last year.

The Melbourne auction market reported a sharp increase in auction activity over July with overall clearance rates rising from 67.7 per cent over June to 71.7 per cent.

Average weekend auction volumes were, however, down over the month, falling from 723 to 457 and also well below the 585 averaged over July last year.

Low interest rates are a key driver of robust auction markets and rising home prices with the cut to official rates in May enhancing buyer momentum. This week the Reserve Bank decided to again cut rates to a new record low 1.5 per cent, with another low inflation rate recorded over the June quarter a clear catalyst for the bank’s decision.

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.

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