Buyers step up to absorb biggest auction tally this year
The apartment at 101/19 Grosvenor Street in Neutral Bay that sold under the hammer for $1.96 million after bidding began at its $1.8 million reserve. Mind The Gap
The property market has stepped up another notch with both Sydney and Melbourne recording clearance rates above 80 per cent even as the volume of auctions nationally reached its highest so far this year.
Preliminary figures for Sydney, where the number of auctions listed rose to 1392 from from 1104 over the previous week, show the clearance rate at 81.5 per cent. Last week it was 78 per cent, on CoreLogic figures.
In Melbourne, the clearance rate was 81 per cent, up from 79.6 per cent over the previous week. Amount of listings also increased to 1458 from 1143 last week.
Home buyers matched the increasing volume despite tougher curbs last month on investor lending and fresh warnings in the last week that a correction for the booming Sydney and Melbourne is on its way.
In Sydney's Neutral Bay any such concerns about the market were put to rest with the sale of a three-bed apartment at 101/19 Grosvenor Street.
It sold under the hammer for $1.96 million after bidding began at its $1.8 million reserve. One year earlier, an arguably better apartment in the same block – higher up and with more car parks – had sold for $1.8 million.
For selling agent Jesse Zammit and Matthew Smythe, of Belle Property Neutral Bay, the sale of Apartment 101 to down-sizers from Cremorne was testament to the robustness of the market
"We're seeing a little bit of hesitation from some buyers," Mr Zammit said.
"People thought 'could it continue into 2017?' and yet with all the restrictions the banks are putting with buyers and investors, the market is still holding firm." SQM Research's Louis Christopher said the Australian Prudential Regulation Authority's strengthening of macroprudential policies last month was not enough to slow the Sydney and Melbourne markets down.
"The market is likely remain strong until at least wintertime or until we see additional action from APRA. At that point we may well see the trigger for a slowdown," he said.
"Confidence remains strong. Buyers are still out there. They are not concerned by the APRA action."
Sydney prices have surged 19 per cent over the past year while Melbourne has posted a 16 per cent gain, according to CoreLogic figures last month. Some analysts, including from JPMorgan and Knight Frank's global head of residential, Lord Andrew Hay, expect the APRA initiatives will ultimately put a brake on galloping house price growth. Mr Christopher however has left SQM's forecasts unchanged, with a prediction Sydney prices will rise between 11 per cent and 16 per cent in 2017, while Melbourne is forecast to gain between 10 per cent to 15 per cent. "The market is not showing any sign it is about to start a downturn," Mr Christopher said on Sunday.
"There are more listings in the market. There are more sellers out there taking advantage of the buoyant market. The buyers are absorbing it all. It illustrates that underlying demand for real estate is still very strong at the point in this time."
Demand for new homes is also strong, especially in Melbourne where land lots are selling well below the median lot price in Sydney of $465,000.
Diversified developer Lendlease hosted the biggest release of lots so far at its Atherstone estate, more than 35 kilometres west of the Melbourne CBD. All 52 lots were snapped up over a few hours through a public ballot on Saturday, with lot prices starting at $135,000.