Weekend auction results appear unshaken, but uncertainty looms
There was no statistical weakening in weekend auction clearance rates after Friday’s rout on sharemarkets. But only the most optimistic expect any flight to property – as occurred a month or so after the October 1987 share market crash. It’s more likely to be a repeat of the aftermath of the initial 2008 global financial crisis.
Melbourne’s clearance rate remained steady, and Sydney’s picked up a tad in weekend results.
But agents did, however, sense a shift in mood, an anxiety among both among the buyers and the sellers.
SQM director Louis Christopher notes “perhaps sellers were more keen to offload”.
And Melbourne buyers’ agent Mal James concluded the top end of the market was tough, “but it was not an absolute shocker”.
There’s no way of telling whether the property herd will panic and flood the market this spring, but there’s not likely to be a flight of purchasers towards property.
There’s just too much despondency about the leading asset classes, except cash.
The best asset class for investors today was fixed interest, not real estate, property guru Mark Bouris told Friday’s Property Council of Australia lunch in Sydney amid plunging equities markets.
“If you’ve got some spare money, there’s only one place you should have invested,“ Bouris, the founder of Wizard Home Loans who now chairs listed wealth management firm Yellow Brick Road, says. “But the question is what’s the best asset to be in at the moment, and really right now, it’s fixed interest.”
Bouris suggested about 70% of a balanced portfolio should be invested in fixed interest, including term deposits and cash management trusts. The rest ought be divided between shares and property, he says.
The turmoil is quite likely to affect the top end of the market, mirroring the aftermath of the 2008 global financial crisis. And on the weekend the James Clearance Rate for $1 million-plus listings in Melbourne was 52% on the 25 auctions the group attended. But only three actually sold under the hammer, and buyer demand was at its weakest since 2008.
“There was not one $4 million-plus bidders’ auction in the 25,” James notes. “The choice of homes on offer was average at best.
“Right now is pretty much a nothing market – and again this weekend, nothing much happened. But nothing much has happened for several months,” James says, pointing out the traditional winter slowdown.
There were 19 sales with prices above $1 million in Sydney, according to Australian Property Monitors, with another four sold for undisclosed prices. There were 12 passed in at prices above $1 million. There were two properties with no bids and four were withdrawn. So a 56% success rate of the 41 $1 million-plus listings.
Uncertainty over the local and international economic climate is clouding what is currently a bright outlook, according to economist Dr Andrew Wilson at Australian Property Monitors.
“Weekend auction clearances rates continue to fluctuate, although they remain reasonably typical of the Sydney winter housing market. Although home buyer activity is set to increase through the usually buoyant spring selling season, the impact on buyer confidence of declining economic activity may prove to have a dampening effect,” Wilson notes.
Melbourne’s weekend clearance rate from the preliminary 460 results compiled by the Real Estate Institute of Victoria. There were 510 scheduled auctions held in Melbourne. On the same Saturday last year the clearance rate was 67%. REIV chief executive Enzo Raimondo says there are about 500 auctions next weekend. After some further results came in from the July 30 auctions, Melbourne recorded a 57% clearance rate. “The falls recorded in the stock market do not appear to have impacted the residential auction market,” Raimondo says.
Sydney’s weekend clearance rate from the preliminary 217 results compiled by Australian Property Monitors. There were 264 scheduled auctions in Sydney. On the same Saturday last year the clearance rate was 60%. Clinton McNabb at APM says there are about 310 auctions due next weekend. After some further results came in from the July 30 auctions, Sydney recorded a 53% clearance rate.
The weekend’s highest recorded price across Australia was on South Road at Brighton. There was just the one bidder, who secured it after auction.
“The main road would be an issue but other than that, it is hard to fault,” James Buyer Advocates principal Mal James notes.
It was a good result, according to James, as it reflected just shy of a 10% increase in the two years since its last sale.
Marshall White agent Madeline Kennedy listed the five-bedroom French Provincial family residence on 670 square metres (pictured above and below). Photo above courtesy of James Buyer Advocates.
It was built in 2008 with a grand foyer with Swarovski chandelier and sweeping staircase, formal American oak study, marble kitchen and a heated pool.
