Australia's property market could be hotting up as we head into the peak spring selling season, with auction clearance rates continuing to rise.
Australia's combined capital cities saw clearance rates of 77.9%, compared to 75.4% last week, according to preliminary data from CoreLogic RP Data.
Sydney saw another strong week, with clearance rates of 85.1%, while Melbourne's auction clearance rates remain consistently high at 78% – down only slightly from the 78.3% last weekend. Brisbane saw a clearance rate of 55.1% from 98 auction results, and Adelaide had a clearance rate of 76.5% from 68 auction results.
Perth is still struggling with low clearance rates – just 40% from 20 auctions – perhaps indicating that the resources slowdown continues.
One factor that could be driving the national clearance rate higher is the lack of properties on the market. According to Domain, the number of homes auctioned in Sydney so far in September is 802 lower or 32% less than last year.
CoreLogic says there were 956 auctions in Melbourne last week, less than the 974 last week and well short of the 1,127 auctions on the same weekend a year ago. Domain says that compared to last year, Melbourne has seen 19% fewer homes up for auction so far in September than last year.
Sydney had 773 auctions during the week, relatively steady compared to 758 last week and the 757 the week before that – although it was well short of the 1,041 held last year. But the clearance rate of 85.1% was well above last year's 71.3% – and it marks the fifth out of six weekends with clearance rates above 80%.
Who's actually buying those houses in Sydney is not a mystery. For one, it's not first home buyers. First home buyer loans in NSW have dropped by 4.6% so far this year to end of July 2016 according to the Australian Bureau of Statistics (ABS).
And with the median auction price of $1,221,000 in Sydney on Saturday, it's clear that most first home buyers can't afford that.
That's despite mortgage interest rates from the big four banks Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) of under 5% – if borrowers can access their special discounted rates. Some non-bank lenders are even offering rates below 4%.
Foolish takeaway
A strong auction market in Sydney and Melbourne is likely to see house prices continue to rise – although they may not match the strong gains seen in 2015.
