#10

Auction Clearance Results June 22nd | Slowing Winter Market Now Emerging

The weekend auction markets reported marginally lower clearance rates and fewer listings on Saturday, signaling the emergence of a quieter winter market.

Key Highlights

National Overview:

• Clearance Rate: 68.2% (slightly down from 67.2% the previous weekend, and below the 70.3% from the same weekend last year)
• Total Listings: 1856 (down from 2068 the previous weekend, but significantly above the 1088 from last year)

City-Specific Results:

• Canberra: 79.1%
• Melbourne: 67.0%
• Sydney: 68.7%
• Brisbane: 54.2%
• Adelaide: 71.8%

Sydney Auction Clearance Results

Sydney clearance rates dipped slightly with fewer listings.

• Clearance Rate: 68.7% (down from 70.8% the previous weekend)
• Listings: 755 (down from 805 but higher than last year's 511)
• Median Price: $1,675,500 (down from $1,745,000 the previous weekend, but 14.8% higher than last year's $1,460,000)

Top Sale: 5-bedroom house at 23 Forsyth St, Willoughby, sold for $7,550,000 Most Affordable: 2-bedroom unit at 10/63 Castlereagh St, Liverpool, sold for $330,500

Melbourne Auction Clearance Results

Melbourne's clearance rate increased slightly before the school holiday break.

• Clearance Rate: 67.0% (up from 65.9% the previous weekend)
• Listings: 900 (down from 1003 but higher than last year's 511)
• Median Price: $1,000,000 (up from $945,000 the previous weekend, but 11.5% lower than last year's $1,129,750)

Top Sale: 5-bedroom house at 5 Rose Av, Surrey Hills, sold for $3,725,000 Most Affordable: 1-bedroom unit at 2/25 Gladstone St, Moonee Ponds, sold for $255,000.

Population Rises 2.47%

Australia's population is growing rapidly, even as new housing supply slows, according to the latest data from the Australian Bureau of Statistics .

Key Highlights

• Population Increase (Dec 2023 - Dec 2024): 2.47%
• Average Growth Rate (over the past two decades): 1.52%
• Homebuilding Starts: Fell 6.4% during the same period

With supply failing to keep pace with demand in both the sales and rental markets, upward pressure on prices and rents is likely.

Interest Rate Outlook Remains Uncertain

On Tuesday the Reserve Bank of Australia (RBA) has maintained the cash rate at 4.35% for the fifth consecutive meeting, leading to widespread speculation about future changes.

Key Highlights

The RBA board has noted that the “economic outlook remains uncertain” and the path to return inflation to the 2-3% target "is unlikely to be smooth." With inflation currently at 3.6%, the RBA is committed to reducing it, even if it means keeping rates high for a longer period.

“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome,” the RBA stated.

Mortgage Arrears Rising from Record Lows

Mortgage arrears have increased from their COVID lows of 1.0% in Q3 2022 to 1.6% in March 2024, the highest since Q1 2021. The average variable interest rate on home loans jumped from 2.86% in April 2022 to 6.39% in March 2024, adding nearly $1,600 in monthly repayments for a $750k debt. Most borrowers are managing repayments by using savings, working more hours, and reducing contributions to offsets or redraws.

Key Factors

• Cost of Living: Pressures are consuming more income.
• Taxation: Households are paying more tax.
• Interest Rate Sensitivity: Higher sensitivity due to high debt levels.

Arrears Data

• Non-Performing Loans (90+ days overdue): 0.93%, slightly higher than at the onset of COVID-19 (0.92%).
• Early Arrears (30-89 days overdue): 0.68%, up from 0.35% in Q3 2022.

Outlook

Despite rising unemployment and depleting household savings, mortgage arrears are unlikely to 'blow out' unless the labor market weakens substantially. Strong underwriting standards, rising housing values, and Australian lenders' robust serviceability assessments and tighter lending policies for riskier loans (interest-only, high LTI, high LVR) are helping to maintain stability. Only around 1% of dwellings have debt higher than the home value, mitigating the risk of negative equity.