The Reserve Bank of Australia’s (RBA) unprecedented monetary tightening, which has seen the largest and sharpest rise in interest rates in Australian history, has done little to curb home buyer enthusiasm.
CoreLogic recorded the strongest preliminary auction results in three weeks, with 73.8% of homes taken to auction nationally returning a successful result.
It was also the eighth consecutive week that a preliminary clearance rate of 70% or more was recorded:
Sydney recorded a preliminary clearance rate of 78.7%. This was 4.2% higher than last week’s result (74.5%), which revised to 70.8% at final figures.
However, Melbourne recorded its lowest preliminary clearance rate in 11 weeks, down 2.8% from last week’s preliminary rate of 72.9%, which was revised to 69.5% at final numbers.
The next chart plotting quarterly growth shows that home values continue to rise in the face of the RBA’s aggressive tightening:
Sydney leads the pack, with values soaring by 4.9% over the quarter. This has driven values at the 5-city aggregate level up by 3.4%.
Indeed, values at the 5-city aggregate level have now rebounded by 4.2% from their 7 February low, driven by a very strong 6.4% rebound across Sydney:
Westpac recently described the current house price rebound as highly unusual given it has occurred despite ongoing interest rate rises and off low transaction volumes.
“Housing recoveries typically only emerge once the RBA is actively cutting rates or is very clearly poised to do so. Price gains also tend to follow a sustained lift in turnover, not vice-versa”, Westpac noted.
Unusual is an understatement given mortgage rates have roughly doubled since the RBA began tightening and borrowing capacity has shrunk by around one-third.
The positive forces of record immigration, soaring construction costs and limited stock on market continue have created FOMO (fear of missing out) and continue to push house prices higher, despite the RBA’s aggressive tightening efforts.
