ISSUE #11
Weekend Auction Wrap from CoreLogic
Auction activity dipped in the final week of the financial year, with 2,001 auctions held, down from 2,150 the previous week but still 458 more than the same time last year (1,543). The preliminary clearance rate also dropped, from 72.4% last week (revised down to 66.2%) to 70.0% this week.
Melbourne
Melbourne saw 862 auctions, down from 975 the previous week, with a preliminary clearance rate of 68.2%, compared to 72.9% last week (revised down to 63.7%).
Sydney
Sydney hosted 767 auctions, with a preliminary clearance rate of 72.0%, slightly up from 70.7% last week (revised down to 63.9%, the lowest final clearance rate so far this year).
Smaller Auction Markets
The smaller auction markets had mixed results:
Looking Ahead
Around 1,800 auctions are scheduled for next week and fewer than 1,600 the week after, indicating the winter slowdown is underway.
Australia's Housing Shortage
Australia faces a significant housing shortage, with a deficiency of at least 200,000 homes, according to AMP ’s Shane Oliver .
Key Points
The surge in population growth to a record 660,000 over the year to the September quarter last year, driven by record immigration levels, has created a demand for around 250,000 new homes. However, completions have been running at about 170,000 due to the home building industry struggling with rising costs, material and labor shortages, and falling approvals for new homes.
Impact
This shortfall exacerbates the housing crisis, putting upward pressure on property prices and rents. The ongoing challenges in the home building industry need addressing to meet the growing demand and alleviate the housing shortage.
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Did You Catch This? Key Insights from CoreLogic's Pain & Gain Report
CoreLogic ’s quarterly Pain & Gain Report, released earlier this week, offers intriguing insights into the property market.
Key Highlights
One notable highlight is the surge in fixed home loans from early 2020 to 2021 when interest rates were at historic lows. Now, two to three years later, the data reveals how the expiration of these fixed terms is influencing resale patterns, particularly in terms of hold periods and profit/loss on sales.
Key Takeaways
The pandemic-driven rise in fixed-term lending has led to a noticeable, though not overwhelming, increase in short-term selling once these terms end. Moreover, the loss rate for these resales is nearly in line with the overall market. For instance, in the March quarter, 6.4% of homes sold after three years incurred a loss, compared to a national loss rate of 5.7%.
Inflation Surge Lifts Chances of Rate Hike
The latest inflation figures are concerning, with the consumer price index (CPI) rising 4% in the year to May 2024, increasing the likelihood that the Reserve Bank of Australia (RBA) will raise the official cash rate. This CPI increase, up from 3.6% in April, was reported by the Australian Bureau of Statistics on June 26.
Major Contributors to CPI Increase:
The RBA board, in its June OCR decision, stated that the economic outlook remains uncertain and that returning inflation to the target range of 2-3% by the second half of 2025 remains challenging. The board is considering all options for the next cash rate decision on August 6.
Additional Insights
Housing was a major factor in May’s inflation rise, with rents up 7.4% annually and power prices up 6.5%. Food prices saw a slight decrease in the rate of increase, while fuel prices fell 5.1% in May, marking the first monthly decline since January 2024.