Auction clearance rates across Australia's capital cities hit a record high of 74.9% last week, compared to 72% the previous week.
That's despite there being nearly 1,000 fewer auctions this week than the same week last year during boom-time conditions. There were 1,517 auctions held last week, compared to 2,512 in the corresponding week last year, according to Core Logic RP Data.
Interestingly, Sydney, Melbourne and Brisbane all saw a rise in auction clearance rates but the remaining capital cities saw falls in the past week. That suggests the property market in the Eastern States remains relatively strong.
Sydney had an auction clearance rate above 80% for the first time since about August 2015 – and even above last year's 78.3%. Melbourne recorded a solid rate of 76.1%, up slightly on last week, but also below last year's 78.5%. Brisbane recorded its strongest rate for the year of 59.1%, although volumes remain well behind both Sydney and Melbourne. Brisbane had 126 auctions this week, while Melbourne held 722 and Sydney had 526.
The 0.25% rate cut by the Reserve Bank of Australia last week is likely to have had a positive influence on the auction clearance results – despite the banks only passing on around half of the cut to their customers.
Australia and New Zealand Banking Group (ASX: ANZ) cut its standard variable rate (SVR) on mortgages by just 12 basis points (or 0.12%), Commonwealth Bank of Australia (ASX: CBA) by 0.13%, National Australia Bank Ltd (ASX: NAB) by 0.1% and Westpac Banking Corp (ASX: WBC) by 0.14%.
CBA now has the lowest SVR of the big four banks at 5.22% – but that's well above what home buyers can get if they look elsewhere. Non-bank lenders are offering rates as low as 3.74% for an owner-occupier loan of at least $300,000. At that rate, monthly repayments are around $1,392 – compared to $1,656 for those considering CBA's 5.22% loan.
Foolish takeaway
It seems that Australia's property markets have recovered from the heavy falls in clearance rates earlier this year, and could be headed for a strong 2016. The biggest risk remains the number of brand new apartments coming onto the market turning into a flood as we warned in March.
