A recent report shows that the increasing interest rate environment has galvanised buyers and sellers alike, who recognise their opportunity to buy or sell may not last forever.
The Apollo Auctions Auction Report found that during September, the average clearance rate across the four main cities it reports – Brisbane, Sydney, Perth and Gold Coast – increased to 63% from 54%, primarily thanks to more active buyers and sellers in the Brisbane and Sydney market.
Justin Nickerson, Apollo Auctions Director, said that it was clear from the analysis that bidders and sellers are committing to purchase at auction, despite lower attendance and bidder numbers.
“However, what was different to last month was the improved auction clearance rate in Brisbane in September – up to 70.83% from 62.70% last month – and in Sydney, where the clearance rate jumped up to 52.31% from a low 38.60% in August,” he said.
“Commentary from our team of auctioneers indicates that buyers and sellers have been galvanised by the increasing interest rate environment because they recognise that their opportunity to buy, or sell, well may not last forever.
Justin Nickerson, Apollo Auctions
“With the latest cash rate rise a more moderate 0.25 per cent, we may be closer to the end of the rate increases, which is bound to have a positive impact on auction markets around the nation.”
According to the team of auctioneers at Apollo, the rising interest rate environment led to a solid uptick in the overall clearance rate during September.
“Spring has definitely sprung in Brisbane with increased listing numbers, particularly across the back end of September, signalling the seasonal and market change,” Mr Nickerson said.
“Positively, we have seen an increase in investor and development activity in Brisbane, buoyed by media attention around this historically tight rental market and subsequent rental increases.”
Gold Coast auction market still booming
With significant interstate migration to the Gold Coast occurring since before the pandemic, a stronger volume of auctions to the Gold Coast market occurred in September.
While some buyers are still seeking a bargain, sellers are now starting to come into line with market conditions.
Noting a healthy clearance rate of around 54%, many Gold Coast properties not selling under the hammer on the day of the auction are going to contract not long after, Mr Nickerson said.
Sydney, he said, performed well in September too, with the auction clearance rate improving significantly.
“It seems that buyer mindset in the Harbour City shifted from FOMO to FOOP (fear of overpaying) as we entered the spring selling season, with the additional fear of increasing interest rates galvanising commitment from buyers and sellers,” he said.
“The $7 million-plus market performed well in Sydney with strong clearance rates, bidder activity, registrations, and crowds, while the mid-level house market saw well presented properties perform the best, according to our Sydney auctioneers.”
In Perth, which traditionally doesn’t have a large auction market, Mr Nickerson noted that the dual-pronged attack of ongoing low stock levels and poor media sentiment have prolonged the spring selling season.
“According to our Perth auctioneers, auctions called last month had an under the hammer success rate of 75% – the strongest result of all capital cities in this report,” Mr Nickerson said.
“Plus, interestingly, more than half of the successful auctions in Perth were with single bidders.”
In Canberra, conditions remain challenging, although there is still a good chance of selling with an unconditional contract on auction day.
Article source: Queensland Property Investor