Melbourne auction spike on back of February rate cut: Westpac's Matthew Hassan

The RBA’s February interest rate cut had given the most apparent boost to the Melbourne auction market, according to Westpac senior economist Matthew Hassan.

"Perhaps the most notable development since the start of the year though is the rise in Melbourne clearance rates," he said today.

"These were notably more subdued in 2014, both compared to Sydney and to previous peaks in 2009-10 and 2007.

"However, they have surged 7-9ppts since Feb to be within striking distance of those previous peaks.

"This suggests the RBA’s Feb rate cut has given a material boost to activity that should be most apparent in the Melbourne market where price growth had been travelling at a more subdued 5% annual pace compared to double digit growth in Sydney."

Matthew Hassan noted his belief that weekly auction market indicators are easily the most timely housing market data available, preceding most other measures by a good four to five weeks.

He added caution must be applied in their interpretation especially as coverage issues mean auctions are only valid gauges for the Sydney and Melbourne markets and even then are skewed to particular parts.

He suggested clearance rates also exhibit clear seasonality that must be adjusted for to provide a cleaner read of conditions.

He highlight whereas seasonality was flattering clearance rates with 1½-3½ppt boosts in Feb and Mar, this effect has dropped back to about ½ppt in April;

"Seasonally adjusted clearance rates are unambiguously strong with April on track for a record high in Sydney."

He added that conditions appear to be weakening more rapidly in markets not well covered by auction statistics.

"Annual price growth has stalled flat in Perth and slipped to just 2.5% in Brisbane.

"Auctions account for less than 3% of transactions in these cities.

"As such conditions on a national ‘average’ basis have likely improved by much less than the rise in Sydney and Melbourne clearance rates indicates."