Auction boom continues in Sydney and Melbourne

The property market is continuing to grow in strength, as Melbourne and Sydney recorded another weekend of positive results on the back of low interest rates and an improving economy.

Sydney recorded its fourth weekend of clearance rates above 70%, with 75% of the 450 houses up for grabs sold at auction on Saturday and Sunday, according to Australia Property Monitors figures.

Melbourne, the auction capital of Australia, also continued to perform well, with the Real Estate Institute of Victoria reporting a clearance rate of 69% for the 806 auctions listed.

APM senior economist Andrew Wilson told SmartCompany the prestige market in Sydney is just starting to respond after an extended slow period – and described the year so far as being "exceptional".

"Certainly the trend is consistent over the year so far, averaging about 70% for clearance rates, the highest since the beginning of 2010.

"Next weekend is one of the biggest weekends for auctions for the year and the scene is set for a very big day of sales if the current trend is upheld. There is no reason for the trend not to be, as the market appears to be strengthening," he says.

Over the weekend, APM reported seven properties selling in Sydney with values over $2 million.

The most expensive house sold at auction in Sydney, a four-bedroom home in Vaucluse, went for $3.35 million, but it was beaten for the title of top auction result by a Lavender Bay property which went for $5.6 million following negotiations after it was passed in.

Wilson says, overall, Sydney's bayside and inner city suburbs continued to do best, with these areas having clearance rates of about 80% and the eastern suburbs having a rate of 89%.

Next weekend, over 700 properties are expected to be auctioned in Sydney. Over 1,200 auctions are expected in Melbourne, which the REIV says is likely to be the fifth highest on record.

Wilson says Melbourne, like Sydney, is seeing a greater spread of activity.

"Similar to Sydney, we're seeing a bit more of a spread. The middle ring, north eastern and eastern suburbs of Melbourne had clearance rates of around 70%.

"We're reasonably confident these trends will continue, with low interest rates fuelling increased demand and confidence in the market place," he says.

In Victoria, the REIV reports the total value of residential sales at auction is at $1.8 billion, compared to $1.5 billion this time last year. The value of private sales is also estimated to have risen from $3.9 billion to $4.5 billion.

Melbourne's top five sales were all above $2 million.

However, while the property market flourishes in Melbourne and Sydney, it continues to struggle in Canberra.

RP Data estimates sales of houses and units were down 20% on the five year average in 2012 and down 13% from 2011.

Wilson says the local economy has impacted the market in Canberra.

"I do believe the main driver in a smaller market like Canberra is what's happening in the local economy. A rise in unemployment and job losses in the public sector does trickle into the property market," he says.