The tsunami of auction activity is beginning to weigh on home values in Melbourne and Sydney.
On Thursday, Cotality released its final auction results for last weekend, which showed that the national clearance rate declined to 62.0%, down from 63.3% the prior week and 66.1% three weekends ago.
The decline in the national clearance rate followed a strong lift in auction volumes. There were 2,756 auctions held last weekend, the busiest auction week since mid-December last year (2,917). The previous weekend saw 2,004 auctions held across the capitals, while the weekend before saw 1,584.
Source: Cotality
Melbourne’s final auction clearance rate fell to 59.3% last weekend from 1,327 auctions, down from 59.7% the prior weekend from 836 auctions and 60.1% three weekends ago from 627 auctions.
Sydney’s final auction clearance rate fell to 62.4% last weekend from 987 auctions, down from 64.1% the prior weekend from 772 auctions and 70.8% three weekends ago from 603 auctions.
The decline in auction clearance rates across our two main capital city markets has been reflected in price growth, with Cotality’s daily dwelling values index recording flat (0%) growth across both Sydney and Melbourne over the past 28 days:
The Reserve Bank of Australia (RBA) is expected to deliver further interest rate increases following the strong inflation report from the Australian Bureau of Statistics (ABS) on Wednesday, which recorded 3.4% annual trimmed mean inflation in January, well above the RBA’s target band of 2% to 3%.
The interest rate futures market forecasts a 100% likelihood that the RBA will increase the cash rate again in May, with a very strong probability that another hike will be delivered before the end of 2026.
As illustrated in the table below, each 0.25% increase in mortgage rates will add $116 in monthly repayments on the average $736,000 new mortgage.
If the RBA were to hike three times this year back to a cash rate of 4.35% (its prior peak), then the average new mortgage holder would face a cumulative increase in monthly mortgage payments of around $350.
If you wish to save thousands of dollars in mortgage payments, try the MB Compare n Save mortgage comparison tool. It is quick and easy.
And if you choose to refinance, Compare n Save will handle the process.
