The latest batch of auction and home price data suggests that the steam may be coming out of the nation’s housing market following the Reserve Bank of Australia’s (RBA) decision to keep interest rates on hold.
Cotality’s auction clearance rates have been moderating since September, which historically has been a leading indicator for price growth.
At the national capital city level, the monthly average final auction clearance rate has declined to 65% as of the third week of November, down from a peak of 70% two months prior.
The decline in the national capital city auction clearance rate has been driven by the two largest markets, Sydney and Melbourne.
Sydney’s monthly average final auction clearance rate declined to 66% as of the third week of November, down from a peak of 72% in August.
Melbourne’s monthly average clearance rate fell to 64% as of the third week of November, down from a peak of 69% in July:
The week’s preliminary auction results showed more weakness, with the preliminary clearance rate falling to 69.2%, down from 70.0% the week prior (which fell to 63.1% on final figures).
It was the first time in 24 weeks that the preliminary national clearance rate printed below 70.0%.
Source: Cotality
Again, the decline in the national preliminary clearance rate was driven by Sydney (down 2.8%) and Melbourne (down 0.8%).
Commenting on the results, leading Sydney auctioneer Tom Panos noted that “the fear of missing out that existed in October appears to have subsided. The craziness has sort of gone”.
Tom Panos attributes the loss of momentum to the shock inflation print and the RBA keeping interest rates on hold.
“I think a lot of it has to do with the fact that after the inflation numbers came out at the end of October and then all of a sudden the whole mood and the sentiment about auctions [changed]”.
“[When] they announced that rates wouldn’t be going down, that sort of changed the mood”, Panos said in his weekend market wrap.
“It actually got buyers to actually stop getting carried away with fear of missing out. But it also brought in a lot of stock”.
“All of a sudden an onslaught of stock hit the market. And when you’ve got a cooling sentiment and you’ve got more listings that basically means that you get a more softening of prices”, Panos explained.
The slowing in auction clearance rates also appears to be showing in prices, with Cotality’s daily dwelling values index fading over the past fortnight, driven by Sydney and Melbourne:
Labor’s reckless 5% deposit scheme for first home buyers continues to push prices higher. However, the RBA’s decision to hold rates has at least removed some FOMO from the market.
