Clearance rates have cooled as auction volumes soar across the U.S. as the pre-Christmas rush spurs buyers to unload properties.
For the second consecutive week, more than 3,000 properties across the country are scheduled to be hit, a 20% increase from a year ago, according to PropTrack.
“This is a fairly significant spike in activity,” said Angus Moore, senior economist at PropTrack.
The number of auction and private sale listings on realestate.com.au has also increased compared to last year, particularly in Sydney and Melbourne.
But Moore said this time last year, the housing market was in the midst of rapidly rising interest rates, causing sellers to hold back during the traditionally busy spring shopping season.
“The market was pretty quiet last year because we had a very rapid rise in interest rates at this time last year, so we're starting to get back to a bit more normality.”
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Heated auctions continue across the country.Photo: Jeremy Piper
Last week, the national clearance rate fell to 56.9%, a drop of 3 percentage points compared to the previous month.
Sydney's clearance rate fell to 56.5% from 61.9% last month, while Melbourne's clearance rate remained at around 60%, down from 61.6%.
Other factors are involved
Moore said customs clearance rates have fallen slightly in recent weeks, but there is no correlation to how that affects prices.
“Clearance rates are down a bit, but not by much. They're still pretty strong compared to the same time last year,” he says.
In markets like Brisbane, which is less auction-heavy than Melbourne or Sydney, settlement rates have been creeping up in recent weeks.
Other factors, such as borrowing power, tight rental markets, and buyer demand, may prove more important in determining price changes.
Borrowing capacity has been hit hard by rising interest rates.Photo: Getty
Moore said the most recent 25 basis point rate hike in November “will probably have some impact on margins.”
“There's going to be less money for people to borrow, so that's probably going to dampen demand a little bit,” he says.
“But it's also important to put into context the fact that we had a 400 basis point increase before that. So while there will be an impact, it may be small compared to what we've seen over the past 18 months. .”
Mr Moore said demand for real estate remained strong even with further interest rate increases expected.
“The rental market is very tight right now, which means there are a lot of people looking for a place to live, but there aren't that many places to live,” he says.
“Unemployment rates are also very low, meaning more people are in work and wages are rising. It’s very important for demand.”
Auction markets most affected
Sydney buyer's agent Deborah West said housing affordability had fallen to its lowest level in 30 years, with lower income segments of the market most susceptible to interest rate shocks.
As a result, buyers are more cautious and auctions are no longer at the “crazy pace” they were a few months ago, he said.
“Every time interest rates go up, people's ability to borrow decreases. That's definitely going to cause a further slowdown at the lower end of the market,” West said.
The lower end of the market is most sensitive to rising interest rates.Photo: Getty
“Once you start reaching the middle end of the market and above, you become less sensitive to interest rates.”
Mr Moore said first home buyer activity had been particularly hard hit.
“In that environment, it's very tough for first-time homebuyers, so certainly not as many people are jumping in at the moment compared to recent years,” Moore says.
Seller demand remains strong until the end of the year
As the traditionally quiet Christmas and New Year period approaches, Ray White NSW auctioneer Perry Edmondson-Clarke says vendors continue to start selling properties later in the year than usual. talk.
“In the past, if you missed the market in mid-to-late November, your agent would tell you to wait until next year, but that won't be the case this year,” he says.
The agency ran a Christmas week campaign to capitalize on demand, at a time when property sales are traditionally postponed until January.
“Given the level of inventory coming into the market, we need to pivot and respond to that,” Edmondson Clark said.
“People have a bit more flexibility in the times they can bid on daytime auctions and we are hoping to get into the auction as an offer to owners who want to sell before Christmas.”
