Australia’s housing market is experiencing a strong upswing.
According to Cotality, last week’s national final auction clearance rate increased to 71.6%, the highest result for capital cities since early June 2023 (73.1%). It was also the third time in five weeks that the final clearance rate was above 70%.
As shown in the chart below, the monthly average final clearance rate in September is also tracking at its highest level since May 2023, signaling stronger price growth.
The weekend’s preliminary clearance rate softened, recording the lowest preliminary clearance rate (71.4%) since the week ending 15 June. However, the AFL Grand Final weekend in Melbourne significantly impacted it.
Source: Cotality
Regardless, leading Sydney auctioneer Tom Panos declared that FOMO (‘fear of missing out’) is driving price growth in the market.
Speaking on his weekend market wrap on YouTube, Panos noted that “it just gets stronger. This market’s good. Everything is selling and selling well… We’re talking about big money over reserves”.
Panos added that buyer demand will likely increase next week because the Albanese government’s 5% deposit scheme for first home buyers comes into effect on Wednesday. Then demand will likely increase further as the RBA delivers additional rate cuts.
“Next week, we’re going to have more buyers because of the October 1 5% deposit scheme. There’ll be more people out there looking”, Panos said.
“Then we’re going to have an interest rate drop most likely, apart from the government stimulus”.
“There is nothing else but strong prices, I expect, for the remainder of this year”.
Panos then explained how he met a buyer paying $750 a week in rent who is “over the moon about the fact that he can now buy a property with a $1.5 million threshold allowing him not to have mortgage insurance. And he can buy with a 5% deposit”.
However, Panos went on to explain that the mortgage on a $1.5 million property with a 5% deposit is $8,200 a month, far above what the buyer is paying in rent (~$3375 a month). “And if rates go up, it goes up even higher”, Panos said.
“I’m calling it fear of missing out. And fear of missing out always precedes a boom”, he concluded.
The combination of falling interest rates and government stimulus has made Australians bullish on property. FOMO is back and running riot, with Westpac’s consumer sentiment survey showing house price expectations are at their highest level in 15 years.
Australian home values, which are already valued at an absurd $1,035,000 on average, are about to get even more bubbly.
