Sellers respond to consolidating market as clearance rate holds

Sydney’s weekend home auction market recorded its strongest clearance rate for the past three weekends, at 70 per cent, despite sellers flooding the market.

Yet, this might not be a sign of a resurgence. The result remained well below the 79.3 per cent recorded during the same weekend in 2014 and might reflect a more circumspect attitude from sellers, with the market now sharply below the record highs of autumn.

Stronger competition for buyers might also be motivating sellers to accept bids.  On Saturday, 1020 homes were listed to go under the hammer – the highest number of October auctions on record and well ahead of last year.

Sydney’s auction stampede by sellers is set to continue through the rest of the spring selling season, with more than 900 auctions again likely next weekend.

Inner-city, higher-priced regions continue to produce the highest clearance rates and remain a solid market environment for sellers. Lower-priced outer west Sydney suburban regions, however, are consistently recording clearance rates below 60 per cent and are clearly better markets for buyers.

Some sellers kicked goals during the weekend. A Chatswood property secured the highest price at auction. The five-bedroom home at 6 Chatswood Avenue sold for $6,055,000 through LJ Hooker Lane Cove.

The most affordable property reported sold at the weekend was a three-bedroom home at 28 Storm Crescent, Blue Haven, sold for $390,000 by Raine and Horne Charmhaven.

Notable sales reported at the weekend included a five-bedroom home at 33 Olga Street, Chatswood, sold for $5.22 million by Shead Property; a six-bedroom home at 14 Bower Street, Manly, sold for $4.62 million by Clarke and Humel Property; a four-bedroom home at 1 Lugar Street, Bronte, sold by Phillips Pantzer Donnelley for $3.95 million; another four-bedroom home at 7 Cameron Avenue, Manly, sold for $3,805,000 by Clarke and Humel Property; and a four-bedroom unit at 89 MacPherson Street, Bronte, sold by Laing and Simmons Woollahra for $3.7 million.

For a list of weekend auction results in Sydney click here.

Trend auction prices rose at the weekend following three weekends of falls influenced by higher volumes of sales from higher-priced regions. The latest Saturday trend price of $1,109,375 was higher than the previous weekend’s result of $1,104,375 and 14.5 per cent above the $969,000 trend recorded over the same weekend in 2014. 

While the steadying market would be encouraging for sellers, the challenges remain unrelenting, with high volumes of auctions set to continue.

Low interest rates have been a key driver of previously strong market activity. However, the rate-cut energy of autumn has clearly dissipated.

The Reserve Bank met for its regular monthly meeting last week and decided to leave official interest rates on hold over October. Although rates have been on hold for five consecutive months, further indications of deterioration in local and international economic activity and continued volatility in sharemarkets might bring a Melbourne Cup Day rate cut into play in November.

Dr Andrew Wilson is Domain Group’s senior economist.

Twitter @DocAndrewWilson

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