Steady Melbourne market faces record December auction action

The Melbourne weekend auction market faces another stern test this Saturday following last Saturday’s record-breaking listing performance.

Well over 1400 homes will be auctioned on Saturday with the prospects of breaking the all-time record for the number of homes auctioned on a December Saturday of 1456 set last year on the same weekend.

This weekend’s strong auction activity will follow last Saturday’s remarkable record-breaking total of 1619 auctions – well up on the previous record of 1558 set on October 25 last year.

The west will host the most number of auctions with 233; followed by the inner south 221, the inner east 199, the north east 184, the outer east and the inner city each with 181, the north 112 and the south east 91.

Mount Waverley has the most auctions scheduled this weekend with 25 followed by Reservoir and Kew each with 23, Cheltenham 21, East Doncaster 20, Glen Waverley 19, Elwood 18 and Bundoora with 17 auctions listed.

The Melbourne auction market comfortably absorbed the record-breaking avalanche of listings last the weekend to end spring on a positive note.

Melbourne recorded a clearance rate of 66.2 per cent last Saturday which was just below the 66.3 per cent recorded the previous weekend and just under the 67.2 per cent recorded over the same weekend last year.

The weekend clearance rates averaged 70.1 per cent over spring this year which is well below the 75.2 per cent averaged over spring last year and the lowest result since the spring of 2012 that recorded an average weekend clearance rate of 61.2 per cent.

Despite the lowest spring clearance rates in three years, Melbourne has nonetheless recorded an all-time record spring for the number of auction sales reflecting the unprecedented volume of homes going under the hammer over the past three months.

The inner east continues to record the lowest clearance rates of all the suburban regions, although last weekend’s result was just ahead of last weekend’s 58.2 per cent.

Melbourne’s trend weekend auction price increased again last weekend, up from the previous weekend’s $755,750 to $768,438. The weekend trend price remains 4.6 per cent higher than the $734,750 recorded over the same weekend last year.

Although reporting the lowest regional clearance rates over recent weekends, the inner east continues to record the highest median house auction price at $1.35 million; followed by the inner city $1,220,000, the inner south $1.18 million, the outer east $936,000, the north east $728,750, the west $695,000, the north $633,000, and the south east $586,000.

The home auction market has finished spring in reasonable shape and although clearance rates are at the lowest levels in three years, record numbers of homes have nonetheless been sold under the hammer over the past three months.

Market confidence remains robust with well over 3000 auctions set to test the market over the concluding three weekends of the year – again likely an all-time record number for December.

Low and falling interest rates energised the market last autumn, but higher mortgage rates over spring have clearly contributed to moderating activity. This week the Reserve Bank met for the final time this year and reflecting better recent economic data, official rates were left at the current record low 2 per cent. Rates will now be on hold for eight consecutive months until the Bank meets again in February 2016.

But as we have seen over recent months mortgage rates can move independently of Reserve Bank settings and with this week reports of deposit rates being cut to below 2 per cent.

Dr Andrew Wilson is Domain Group’s senior economist

@DocAndrewWilson