Sydney and Melbourne property clearance rates bounce back: will it last?
Clearance rates in two of Australia’s biggest property markets, Sydney and Melbourne, were strong over the weekend, but are likely to trend downwards in the coming quarter, according to Mozo’s property expert, Steve Jovcevski.
Sydney’s auction clearance rates bounced back to 79.3% over the weekend, after a slump at 73.6% the weekend before, while Melbourne's rates remained stable around the 78% mark.
According to Jovcevski the pattern wasn’t unexpected.
“It’s not unusual at all to see a drop in clearance rates just before the Budget announcement, as buyers and sellers wait to see what policies will be announced,” he said.
Sydney and Melbourne auction results
This year’s Budget announcement included a number of measures designed to alleviate housing affordability issues and help first home buyers enter the property market. These included a scheme to allow buyers to salary-sacrifice through superannuation accounts in order to save up a home deposit and incentives for older Aussies to downsize from large family homes to smaller properties.
While these policies may have contributed to this weekend’s bounce back in the Sydney market and steady results in Melbourne, Jovcevski said that it’s likely to be temporary.
“I think we’ll begin to see a slowing in the market pretty soon. Interest rates have been heading up since December last year, the APRA restrictions will be making themselves felt and now the Budget has clamped down on foreign investors,” he said.
The Budget addressed the number of foreign investors snapping up Aussie real estate with a “ghost house tax” starting with fees around $5,000 for foreign investors who leave their property vacant and by limiting foreign investors to 50% of new development purchases. Both policies could see auction clearance rates in Australia's capital cities slump in coming months.
Jovcevski predicted that from July 1, when the Budgetary policies come into effect, clearance rates will likely drop, as investors tread carefully. But that could be a good thing for first home buyers, who could use the chance to get a foothold in the market.
“I wouldn’t say this is the end of high property prices, especially in Sydney, but it might mean a period of lower prices and slower demand, so it could be a good time for owner-occupiers to pick up a property while investors’ confidence is down,” Jovcevski said.
But with interest rates on the rise, buyers will want to be sure they’ve found the best home loan available before heading to an auction. So if you’re ready to snap up your dream home, check out the winners of our recent Mozo Experts Choice Home Loan Awards, or head over to our mortgage comparison tool to search over 500 options.