In last weekend’s market wrap, leading Sydney auctioneer Tom Panos declared that the “market has changed”, noting that “buyer depth is diminishing” and that “fear is gripping the market” amid rate rises and inflation.
Last weekend’s final auction clearance rates supported this assessment, with Sydney’s and Melbourne’s final average March clearance rates falling to their lowest levels of the year:
Panos followed up with another sober assessment this weekend, declaring that “it is super clear that we are changing direction in the marketplace and whilst buyers were chasing the market up, houses now look like they’re chasing the market down”.
He added that the market is likely to get worse given that “more rate rises are coming. And for that reason, I believe that it probably will get more challenging”.
This weekend’s preliminary auction results certainly supported Panos’ views, with only 62.7% of homes sold across the combined capital cities, the lowest preliminary clearance rate since mid-December last year.
Source: Cotality
Melbourne held the highest volume of auctions this week, with 1,413 homes going under the hammer. The number of auctions was 6.2% higher than a week ago and 15.6% higher than at the same time last year.
Melbourne’s preliminary clearance rate was 64.2%, which was 2.7 percentage points lower than the previous week’s rate and the lowest since the week ending April 20th of last year (affected by the Easter long weekend).
Sydney hosted 1,008 auctions, a 2.4% increase from the previous week and a 24.4% increase from the same week last year.
Sydney’s preliminary clearance rate fell to 60.8%, a 4.3-percentage-point decrease from the previous week and the lowest preliminary result since mid-December last year.
The latest data from Cotality’s daily dwelling values index shows that Sydney and Melbourne values have stalled, growing by 0.1% in Sydney and -0.1% in Melbourne over the past 28 days:
The interest rate futures market has fully priced two more 25 bp rate hikes by the end of the year, which would take the official cash rate to a 15-year high of 4.60%:
If these rate hikes were to come to fruition, then dwelling values across Australia’s two largest capital city markets would almost certainly fall.
