Buyers still in charge as early auctions results point to flat price outlook

The number of auctions held in capital cities increased over the weekend, but so far most markets are recording subdued price results, suggesting 2011 will be a year of little growth.

Australian Property Monitors economist Andrew Wilson says it’s still early days, but says the momentum is definitely on the side of the buyers.

“We still need a couple of more weeks to see what’s going on, but in terms of clearance rates and the number of properties on the market, we’re seeing clear indications that there is a lot of buyer activity going on.”

“We’re also seeing that maybe property owners are thinking it’s a good idea to sell, as they’re aware of the fact that the next year is a bit uncertain when it comes to property.”

APM data showed Sydney recorded a clearance rate of 69.9%, out of 134 reported auctions. The total value of homes sold came to $75 million, with a median price for houses of $730,000 and for units of $577,000.

In Melbourne, APM said the clearance result came in at 62.2%, a slight improvement on last week, out of 116 reported auctions. This is roughly in line with the Real Estate Institute of Victoria, which said that Melbourne recorded a clearance rate of 66% out of 338 auctions reported.

Melbourne recorded a total value of properties sold at $37.7 million, with a median housing price of $575,000 and unit price of $405,000.

Wilson says these are “encouraging results”.

“We’re certainly above the 50% clearance rate market which we were seeing last year, and we’ve had higher number for properties in both Melbourne and Sydney. It’s too early to call yet, but it is an encouraging result.”

However, Wilson does point out that prices have tended to stay flat as more buyers realise they can find a bargain.

“This could be one of the issues we’re seeing right now – the fact that vendors are more inclined to sell. It does reflect buyers are active, they’re not sitting on their hands.”

“Looking at these results, I would suggest there would be a steadying out in the market, although we do need a few weeks to actually tell what’s going on.”

SQM director Louis Christopher says he believes the clearance rates are weaker than they appear, given the number of unreported results.

“We think the clearance rates are a little overplayed. However, the market has opened reasonably well in Sydney, and if it was to continue at this rate we expect to see growth of about 2-5% for the year.

“But that’s Sydney. Melbourne is carrying on with clearance rates in the low sixties, and the other cities are fairly weak. The other cities are recording fairly flat results.”

In Adelaide, a clearance rate of 48.4% was recorded with 15 properties sold, with a total value of $7.5 million. Brisbane recorded a 13.3% clearance rate, with 13 properties sold at a total value of under $1 million.