NERVOUS home buyers have not been reassured by Reserve Bank signals that interest rates will remain on hold, with auction clearance rates remaining low throughout the country over the past weekend (12-13 April).
With mortgage rates rising so rapidly in the last few months, buyer sentiment in the property market has taken a battering, and even though the Governor of the Reserve Bank has signalled rates are firmly on hold, this doesn’t seem to have provided much comfort to buyers.
In Sydney, the clearance rate was 50.2 per cent, only a slight improvement on the previous week’s dismal 45.7 per cent. The most expensive sale was a five-bedroom house in the beachside suburb of Bronte for $4million.
Melbourne’s clearance rate was 62 per cent, well below last year’s 84 per cent. The median house price was $552,000, with the dearest house, at Canadian Bay, fetching $2.5million.
In Adelaide the clearance rate was 47.2 per cent, a dramatic drop from last year’s 73.5 per cent.
Brisbane’s property market continued to nosedive. The clearance rate for the weekend auctions was 35.7 per cent, down from last week’s 37.9 per cent.
With a market that has a large number of unsold inventory, a bottleneck is being formed. This reflects the large number of buyers originally encouraged into the market this decade by government initiatives such as the First Home Buyers grant who took out loans whose repayment schedules were far larger than they could reasonably pay
Subsequently, rising mortgage rates are forcing many of these people to sell.
Given that buyer confidence is low, and there’s more stock on the market than there are buyers, something has to give! And, at this stage – confidence and house prices are giving way in equal measure.