While this weekend’s auction results remained largely in line with clearance rates from the past few months, the consistency of the figures leading into Winter have raised fears the property market may not recover until the Spring selling season hits in September.
Such a prolonged downturn could bring down prices even further, with some experts, such as SQM Property managing director Louis Christopher, saying values will fall by at least 5% over the entire year.
Over the weekend, Melbourne and Sydney clearance rates both dipped into the high 50s and low 60s. The result suggests buyers are still scarce, fearing interest rate rises, and sellers too eager to cash in on higher valuations.
“They’re largely staying the same,” Australian Property Monitors economist Andrew Wilson says of the clearance rates.
“They’re signalling there is a disconnect between the expectations of buyers and sellers, and there are a lower number of sales because of that. And that’s certainly to be expected after strong pricing growth in any case.”
Particularly in Melbourne, Wilson says, there is a “big question mark” around what type of landing will occur in the market.
But such speculation also assumes the Winter selling season will be particularly dry.
“Sydney looks the best bet for a recovery and things are getting more positive there. But with the Winter months coming up, it’s a quiet period for the rest of the market so it’s going to be a ‘wait and see’ mentality until Spring.”
There is one potential for recovery – the number of properties will be higher in the next few weeks.
“But interestingly, we’re going to see a higher number of auctions come through in the next two weeks. That may just give us higher sales figures, but if we continue to see the same number of sales then it does indicate there is a fairly entrenched position.”
Real Estate Institute of Victoria chief executive Enzo Raimondo said Melbourne’s 58% result was “below the year-to-date average”.
“Last year there was an increase of auctions held in May and it resulted in a reduction in the clearance rate, a circumstance that appears to be repeating itself in 2011.”
There were 712 auctions, of which 415 sold, but next week 885 auctions are expected, which could result in higher sales figures.
Sydney recorded a 61.1% clearance rate, with 711 listed auctions and 165 reported sales, while Adelaide and Brisbane recorded results of 21.6% and 33.3% respectively.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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