The surge in applications for first-home buyer grants has not been enough to prevent a big fall in the number of homes sold at auction this year.
Auction results were solid at the weekend, with the Sydney market recording a 68% clearance rate, with 156 properties sold at a total value of $94.9 million.
Melbourne also had a good weekend, with a clearance rate of 77% of the 436 properties at auction going under the hammer. Total sales were $207.1 million.
Brisbane had a clearance rate of 53% with 29 properties selling for a total of $7.3 million, while Adelaide recorded an 86% clearance rate on just seven properties.
But the good clearance rate results hide a relatively depressed market.
Only 500 properties were sold at auction over the weekend in the Sydney, Melbourne, Adelaide and Brisbane markets, compared to more than 1800 at the same time last year.
Just 1775 properties have been listed on the market since 1 January, down from 3700 during the same period last year.
Real estate agents say properties under the $500,000 mark are selling well, indicating strong interest from first home buyers, who have been lured back into the market by generous government grants, low interest rates and falling prices.
But the first home buyer surge might be about to be tempered, with Commonwealth Bank announcing it will toughen up the borrowing rules for first home owners by insisting they produce at least 3% of the purchase price on top of government grants of $14,000 for the purchase of an existing home and $21,000 for a new home.
CBA group executive of retail banking services Ross McEwan told The Australian that “customers who have skin in the game in terms of their own funds are more committed to continue their repayments”.
“So in the next couple of weeks, we’re implementing a policy to require borrowers to contribute a minimum of 3% (of the purchase price) on top of any government grant.”
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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