CoreLogic has released its final auction results for last weekend, with the final clearance rate rising to 70.7%, which was the best result since February 2022 (70.9%) – months before the Reserve Bank began its interest rate tightening cycle.
Sydney (72.3%) and Melbourne (70.4%) drove the result, with both capitals recording clearances above 70%:
The next chart plots the strong rebound in auction clearance rates across Sydney, Melbourne and the combined capital cities:
With record immigration into Australia and the rental market experiencing record tightness, ‘Fear of Missing’ (FOMO) is now playing a key role in the housing rebound.
This FOMO is being exacerbated by an acute lack of stock, with auction volumes remaining well below average, down 41% year-on-year:
The strong rebound in auction clearances has led house prices higher, as clearly illustrated in the next chart:
Despite three 0.25% interest rate hikes in February, March and May, dwelling values across the five major capital cities have rebounded by 2.5% since bottoming on 7 February:
One can only imagine how quickly prices will rise if/when the Reserve Bank commences the next easing cycle.
With buyer demand robust and supply constrained, the only thing preventing rapid price growth is the reduced borrowing capacity that comes from rising interest rates.
Thus, once interest rate cuts commence, and borrowing capacity rises, house prices will inevitably boom.
