Australian house prices have steadied, and auction clearance rates are climbing back

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David Scutt| Business Insider| 24 July 2017

Australian capital city house prices steadied last week after strong gains earlier in the month, according to data released by CoreLogic today.

On an average weighted basis, prices fell by 0.1% across Australia’s five mainland state capitals, led by a 0.6% pullback in Brisbane.

Elsewhere prices in Sydney and Melbourne were flat while they slid by 0.2% in Perth. Adelaide, at 0.5%, recorded the largest increase for the week.

Despite the flat outcome in Australia’s largest housing markets, prices in Melbourne and Sydney have still increased 4.2% and 2.1% respectively over the past four weeks, leaving them head and shoulders above the other capitals in terms of price growth in 2017.

Source: CoreLogic

Fitting with the rebound in price growth over the past month, auction clearance rates have also recovered following a regulator-induced slowdown in the June quarter of this year.

Here’s the latest preliminary auction clearance rates by individual capital for last week. Again, the data comes from CoreLogic.

Source: CoreLogic

At 74.8%, the national figure was well above the 69.4% final reading of the previous corresponding week.

While the preliminary figure will almost certainly be revised down when final figures for the week are released on Thursday, it’s still likely that the national clearance rate will top 70% for the first time in close to two months.

Of the individual capitals, Melbourne recorded a red-hot preliminary clearance rate of 79.4%, continuing the strong rebound seen over the past month.

“The strongest rate of clearance was recorded across the North West region, where 90.1% of the 71 reported auctions were successful,” said CoreLogic. “Five of the nine sub-regions recorded clearance rates above 80.0%.”

Very strong results, helping to explain the recent strength in Melbourne property price growth.

Sydney, Perth and Canberra, at 74.9%, 73.3% and 73.3% respectively, also recorded strong results for the week.

While the rebound in clearance rates goes someway to explaining recent strength in house prices, the steadying in price growth last week, coming despite higher clearance rates, suggests that vendors may be starting to lower their expectations for sales prices.

Of course, one week does not make a trend, but it’s something to keep an eye on in the period ahead.

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