Eight consecutive interest rate hikes from the Reserve Bank of Australia (RBA) looks to have finally broken Australia’s auction market, with clearances plummeting in the biggest weekend of auctions since late May.
Preliminary data from CoreLogic shows that the national clearance rate fell to 57.9%, which was the lowest preliminary clearance rate since the week ending 24th July.
Sydney’s residential auction clearance fell by 6.3 percentage points to 58.5%. It was the NSW capital’s biggest auction week since May, with 960 properties listed for auction.
The preliminary clearance rate in Melbourne was also down three percentage points at 59.4%, with some 1,182 homes scheduled for auction – the capital’s busiest auction weekend since mid-June.
Commenting on the result, AMP Capital chief economist Shane Oliver noted that last week’s interest rate increase to decade high of 3.1% has crunched borrowing capacity and are really starting to bite.
“As Finder has calculated for a $500,000 loan, you will now need a minimum pre-tax income of about $181,000, up from $122,000 in April”, Oliver said.
“Housing-related indicators are all very weak”.
