According to RP Data, auction clearance rates for the week ending November 17 grew to 69.6% throughout Australia, up from 68.3%. The capital cities that have seen the highest clearance rates were Sydney (78.2%), Melbourne (70.3%) and Canberra (59.5%) whilst just over a quarter of Tasmanian auctions (27.8%) finished with a sale.
The increased sales rates make it the second busiest seven-day period for auctions this year and has prompted some to believe that we're headed for record auction sales this coming weekend. Dr Andrew Wilson of Australian Property Monitors said, "Sydney has an unsurmountable head of steam and it is certainly going to reach a crescendo over the next month." Sydney's auction clearance rates have now averaged an incredible 83.3% throughout the spring.
In yet further evidence of improved confidence in the market, a total of 2308 properties went under the hammer, up from 1575 last year.
However, Dr Wilson noted the latest data from the Australian Bureau of Statistics and consensus of many other property market commentators in noting that investors, not home-owners, were pushing up prices. "Latest ABS data points to the significant influence investors are having on the local housing market."
This is unsurprising given the record low interest rates on offer from the banks. In September RateCity chief executive Alex Parsons said, "Investors have been ramping up their presence in the market for some time, and now account for the biggest proportion of all new home loan dollars settled."
As a result we've seen a rise in the number of interest-only loans as well as higher loan-to-value ratios offered by the big banks, including ANZ (ASX: ANZ) and Westpac (ASX: WBC), in a bid to maintain or increase their market share of mortgages.
Foolish takeaway
It seems Australian property prices can only go one way, up. This has prompted many international and local investors to start snapping up cheap credit and raising property prices in the process. Like any investment, it'd be wise not to bite off more than you can chew. So far interest rates are dropping and house prices are rising but what would happen if the cycle started reversing?
