Solid early season Melbourne auction market on the rise

Activity in the Melbourne weekend home auction market will rise sharply this Saturday as the late summer season gradually gathers momentum.

192 homes are listed to go under the hammer this weekend which is significantly higher than the 98 auctioned last Saturday and also higher than the 189 listed over the same weekend last year.

Melbourne’s outer east and west suburban regions will provide the bulk of auctions this weekend each with 43 listings.  Next highest is the north east with 28 followed by the south east 21, the north 18, the inner city and the inner south 14 and the inner east with just 11 auctions scheduled this weekend.

Lalor in Melbourne’s north east is the most popular suburb for auctions this weekend with 6 followed by Croydon 5, Craigieburn and Dandenong North each with 4 and a number of suburbs with 3 auctions on Saturday including Mill Park, Boronia, Melbourne and St Albans.

Melbourne has made a solid start to the year with comparatively high listing numbers reflecting early confidence in the market by sellers. This was reinforced with last Saturday’s encouraging clearance rate of 74.1 percent that was higher than the 68.9 percent recorded at years-end on December 19 last year and also above the 72.7 percent recorded over the same weekend last year.

Last weekend’s result was also the highest January Saturday clearance rate recorded in Melbourne since the strong market conditions of 2010 – five years ago.

Significantly higher numbers of auctions this weekend in Melbourne will provide a more robust indication of underlying local housing market conditions.  A broader spread of properties will be on offer covering price ranges and regions.  Inner suburban homes will contribute a gradually higher proportion of auctions over coming weekends.

This week the Reserve Bank met for the first time for the year and predictably determined that interest rates would remain at the record low level of 2 percent over February.  Official interest rates have been on hold now for 9 months following the cut last May.  Although dark clouds are gathering around the global economy the Reserve Bank is likely to continue with its current wait and see approach on rate settings.

A likely trigger for a near term cut in rates by the bank would be a sustained deterioration in the labour market with the unemployment rate rising above 6 percent.  The current national unemployment rate stands at 5.8 percent and has now been below 6 percent for three consecutive months. This provides the Reserve Bank with some quiet confidence for a relatively stable short term local economic outlook.

Despite steady official rates the likelihood nonetheless remains that banks will follow up last year’s increase in mortgage rates both to investors and owner-occupiers reflecting recent policy changes by the financial regulator.

Dr Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson