Property market proves ‘remarkably resilient’ as sellers return to market

June 16, 2020English

Property market proves ‘remarkably resilient’ as sellers return to market

June 16, 2020
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Australians who shelved plans to sell their home at the start of the pandemic are slowly returning to the market.

But prices are still expected to fall by up to 10 per cent.

As state and territory governments gradually lift virus restrictions, new data from CoreLogic shows the number of auctions scheduled in the week ending June 14 (1164) was roughly double the weekly average recorded in May (589).

Encouraged by governments’ handling of the health crisis and the recent return of on-site auctions, vendors are relisting their homes and feeling more confident about finding buyers.

“And clearly, if you look at the Sydney clearance rate, in particular, the buyers are there at the moment to take up that extra supply,” CoreLogic auction commentator Kevin Brogan said.

Almost two-thirds (63.3 per cent) of homes scheduled for auction in the week ending June 14 found buyers, according to CoreLogic’s preliminary weighted clearance rate across the capital cities.

Of the 795 results CoreLogic captured, 502 homes sold and 293 did not.

“All of these [figures] are quite encouraging for the market at the moment, but what we need to bear in mind is that they are coming from a low base, because the impact of [the coronavirus] was quite dramatic,” Mr Brogan told The New Daily.

“And the other thing is, we need to continue to be vigilant in making sure that all the containment measures that are in place continue to keep coronavirus cases at bay.”

Sydney and Melbourne – the nation’s busiest auction markets – both recorded clearance rates above 60 per cent in the week ending June 14.

And the Harbour City led the charge.

There, 532 scheduled auctions returned a clearance rate of 67.3 per cent.

The week before, 62.2 per cent of 388 scheduled auctions were successful.

Among the successful vendors this week were Sam and Nathan Moscato, who sold their three-bedroom home in Ryde for $345,000 above the reserve price ($1.945 million), according to the Sunday Telegraph.

The couple said the unexpected result brought them to tears and left them feeling “very lucky”.

Owners Sam and Nathan Moscato sold their three-bedroom home in Ryde, News for $1.945 million. Photo: McGrath

Meanwhile, Melbourne also experienced a rise in the numbers of properties selling at auction over the same period. But the clearance rate went backwards.

In the week ending June 7, 64.1 per cent of 189 scheduled auctions were successful. Over the following week, the success rate fell to 61.0 per cent of 474 auctions.

Melbourne’s most expensive sale was this four-bedroom, two-bathroom home in South Melbourne. It sold for $5,375,000. Photo: Greg Hocking

Wakelin Property Advisory director Jarrod McCabe said homes selling below $1.5 million had held up most during the crisis.

He told The New Daily this was because homes in this price bracket enjoyed more diversified demand – appealing to everyone from first-home buyers and families, to investors and up-sizers.

Mr McCabe said the federal government’s successful handling of the pandemic had encouraged buyers to return.

But he said the market’s real test will come in spring.

“Even in a strong market, you quite regularly see the clearance rate drop through spring, because of the significant increase in supply,” Mr McCabe said.

“And it will be very interesting this year, because we’ll get that again, but it’s also likely to coincide with when some of the government support mechanisms might be pulled back a bit.”

 

The auction figures come after CoreLogic revealed at the beginning of the month that national house prices fell in May for the first time since July 2019.

Prices dropped 0.4 per cent over the month, led by falls in Darwin (-1.6 per cent), Melbourne (-0.9 per cent) and Perth (-0.4 per cent).

The Australian housing market has slowed in response to coronavirus,” AMP Capital chief economist Shane Oliver said in a note to clients. 

Social distancing has driven a collapse in sales volumes, home prices are starting to fall, and a sharp fall in employment [and] stop to immigration and rent holidays poses a major threat to property prices into next year.”

Dr Oliver said government stimulus payments and mortgage holidays would likely stop prices falling as much as 20 per cent.

But he said falls of 5 to 10 per cent were still on the cards.

Source: The New Daily