Will Sydney have another boom-time clearance rate this weekend?

All eyes will be on the Sydney auction market this weekend to see if last weekend’s remarkable result is repeated. 

Following a weaker previous weekend, the local market surged to record a clearance rate of 80.3 per cent – the highest result since the 83.1 per cent recorded on Saturday, July 18 last year near the peak of the prices boom.

Auction numbers will be higher this weekend with more than 550 homes set to go under the hammer compared to last weekend’s 506 but again, well below the 750 auctions listed over the same weekend last year.

Sydney’s inner-west suburban region will yet again clearly host the highest number of auctions on Saturday with 101. Next highest is the upper north shore with 76 followed by the city and east 72, the lower north 67, the south 59, the northern beaches 42, Canterbury Bankstown 35, the south west 34, the west 31, the north west 23, the central coast 18 and the Blue Mountains with just one.

In individual suburbs, Mosman has the highest number of auctions listed on Saturday with 14, followed by Strathfield with 10, Leichardt and Mortdale nine each, Ryde and Cremorne each with seven, and several suburbs scheduled with six including Surry Hills, Wahroonga, Balmain, Earlwood, Dee Why and Randwick.

Clear signs are emerging that the prospect of changes to negative gearing is activating investors in Sydney’s housing market keen to secure property under existing conditions.  

Latest ABS lending finance data revealed a surge in residential investor activity, with loans for this group increasing by 30 per cent over the month of March. Lending of $5.5 billion was approved for investors – the highest monthly total since September last year.

The national market share for investor finance allocated to NSW has risen to 45.7 per cent. Investors account for 55.3 per cent of all residential lending over March in NSW, the highest proportion since August last year. Higher levels of investors have translated into lower levels of first-home buyers, with the proportion of overall residential lending to this group falling to an all-time low of 7.2 per cent.

The rush to market by investors over March predates the cut in interest rates last week, which is certain to increase activity levels further.

Last Saturday’s auction clearance rate was a remarkable result with underlying market dynamics – surging investors and boom-time clearance rates – likely to translate into a revival of prices growth. Again, not good news for first-home buyers.

Dr Andrew Wilson is Domain Group’s chief economist

Twitter @DocAndrewWilson

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