Auction rates rise and housing prices are up

Low interest rates, stable employment and lack of stock for sale is great news for homeowners.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Auction rates are on the rise, prices are climbing, new homes are taking a bounce back and interest rates are low. Is this the best time to buy property?

Over the weekend, the number of houses for auction was modest but buyers were buying. According to the Real Estate Institute of Victoria, Melbourne's clearance rate was 71%, which is up from 58% this time a year ago.

Many houses were going for well above their reserve, with the biggest winners being high-end apartments. Bidders were out in force and hurrying auctioneers to begin selling.

Woodards Director John Piccolo said that "All the fundamentals – low interest rates; stable employment and lack of quality stock – contribute to consumer confidence and that's reflected in the pricing".

This comes on the back of a moderate yet healthy HIA New Home Sales Report from Australia's biggest builders for the month of May. Last week the report detailed that new homes increased 1.6% overall and showed Victorian, New South Wales and South Australian multi-unit sales grew at a rate of 5.7%.

According to HIA, Australia has experienced a modest growth in construction of residential homes in 2012/2013 and it will likely trend upwards into the financial year.

Many S&P/ASX 200 (ASX: XJO) (^AXJO) listed property stocks will be cheering on the news ever since the GFC took much of their share price that has yet to be recovered.

However, two stocks that have had a solid run in the past three years are Commonwealth Property Office Fund (ASX: CPA) and GPT Group (ASX: GPT). At current prices both pay stable dividends over 5% and are moderately valued.

Foolish takeaway

The RBA's goal of lowering interest rates to stimulate investment in non-mining sectors seems to be having an effect on the market. Whether it is sustainable in the long term is another question. However, regardless of interest rates and housing prices, time has proved that buying good quality stocks is a sure way to beat the market and make a healthy return. If you don't want to put large amounts of capital directly into the housing market, perhaps property stocks could be a viable alternative.

The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »