Is property going to continue its hot run? Here's what home buyers are looking at
One of the quickest ways to gauge the property market is to check on auction numbers. While what happens at auction isn't definitive, it can give you a sense of how buyers and sellers are acting at a given point in time.
Last year, there were some dips in auction activity, but given all the disruption, the market was pretty steady overall. Indeed, many would say it only got harder for first-time buyers in a number of areas, as prices escalated.
But as we headed into Christmas and then had a break, activity slowed, as it usually does. Of course, things don't typically pick back up until the school holidays are over and people have a moment to tune their attention back to buying or selling a home in the year ahead.
Given this, current auction numbers are maybe what you'd expect - relatively low by volume, with just 448 capital city homes taken to auction a week ago.
Let's look at the busiest and biggest markets, Sydney and Melbourne.
There were 144 homes taken to auction across Melbourne this past week; of 100 results collected initially, 64% reported a successful result, says Corelogic RP Data. This is roughly on par with the average final clearance rate through December (63%) - though it's a very low number of homes for sale.
In Sydney, 79 homes were taken to auction last week - even lower - and yet up from 37 this time in the city last year. Of the 60 results collected, 58% were successful, down slightly from the December average where 60% of auctions cleared, as per Corelogic's report.
These are pretty pedestrian numbers, but don't be fooled. This state of affairs will likely remain very temporary. Furthermore, clearance rates were generally higher across the smaller capitals, continuing the stronger trend observed through late last year. For example, Adelaide recorded the highest preliminary auction clearance rate (78%), followed by Canberra (76%) and Brisbane (76%). Perth saw 50% of homes sold, although volumes remain low across the city. There were two auctions in Tasmania this week, with one reporting a successful result.
So what's next? Auctions in late January
According to Corelogic, the number of homes taken to auction will continue to rise over the coming weeks. In fact, in its most recent report, Corelogic says that 1,179 homes are expected to go under the hammer this weekend - the last in January, with Melbourne and Sydney once again leading the charge.
This bodes well for the general strength of the market, meaning that sellers are eager to capitalise on the ongoing pent up demand from "shut-out" buyers in 2021. More homes made available can also mean more opportunities for prospective buyers, especially those who have a first deposit saved and ready, and who are already looking to lock in a home loan.
But the rate at which prices increase in 2022 remains to be seen, as does the appetite for buying when interest rates are likely to climb.
If you’re ready to buy and are in the market for a home loan, be sure to have a look at our home loan comparison page.