Housing market: Auction clearance rates rise after Coalition election win

There was the first sign that housing prices are bouncing back on the weekend, with buyers keen to flock back to the market.

Sydney may have had its strongest auction results of the year.

Strong auction results from the weekend reveal buyers are keen to flock back into the market just a week after Bill Shorten’s shock defeat at the voting booths.

The Labor Party’s proposed policies to change negative gearing and capital gains tax concessions were viewed as a foregone conclusion but early indicators show Scott Morrison’s surprise election victory will be a boost for the struggling housing market.

Sydney recorded preliminary auction clearance rates of 69.9 per cent, according to CoreLogic, which is expected to achieve its best final clearance rate for the year adjusting for slippage.

The final rate will likely fall in the low 60 per cent range, compared to the 56.6 per cent the week before.

The combined preliminary capital cities rate jumped to 62.6 per cent from 57 per cent the Saturday before.

The market was expected to continue its downward spiral if the Labor Party had formed government and enacted on its promise to overhaul property policy.

But the election results combined with the Australian Prudential Regulation Authority removing guidance that customers should be able to repay their loan if their interest rate increased to at least 7 per cent have given buyers renewed faith to jump into the market.

“There are obviously some issues which would buoy confidence,” CoreLogic residential auction market commentator Kevin Brogan told news.com.au.

“The fact that investors are looking at continuity of the negative gearing and the capital gains tax concessions would be one thing.

“But also interesting to note is that post-election there’s been a fair bit of talk about APRA changing the serviceability buffer to make it less onerous for a new borrower.”

The likelihood the Reserve Bank of Australia will cut rates at the start of next month might be the final hurdle before buyers return in droves.

The winter months are typically slow for property activity but Mr Brogan says an interest rate cut may prove too irresistible.

“We’ll see fairly quickly whether or not people are deciding to list straight away or if they’re going to be anticipating a big spring, which is traditionally when the market really picks up,” he said.

Auctioneer James Pratt said the weakening of the Sydney market had been evident by the lower turnout to bid for homes.

He said there was typically only one active bidder at auctions leading into the election but on Saturday there were two more registered parties at each of his homes going under the hammer.

“That makes a huge difference in this market when you’ve got four registered and three of those four are bidding,” Mr Pratt said.

James Pratt had a strong weekend of auction results, he says buyers are coming back.

He said both buyers and sellers had been passive this year, either waiting to see prices fall further or signs of a turnaround in activity.

But the flurry of recent good news will lead to many investors jumping into the market, worried they’ll miss out on lower prices.

“Right now buyers know it’s a good market but for how long and that’s the number one fear, that it’s going to get back to that point where they’re just going to keep missing out because the prices keep jumping each month,” he said.

SQM Research founder Louis Christopher said the small sample size made it hard to rush to conclusions but he has been vocal in his view Labor’s policies would have caused the housing market to plummet further.

“We need to see a few more weeks go by before confirming a new trend, other than to say our expectation is the market is likely to strengthen from here,” he said.

Realestate.com.au chief economist Nerida Conisbee said the site is yet to see a significant lift in activity either from a buyers point-of-view or a sellers.

“We’ve seen very low numbers of new listings over the past 12 months, so buyers have been sitting on their hands but we should start to see more buyers coming through,” she told news.com.au.

“I really think the big jump will happen in spring, that will be the time at which we really start to see the market performing again.”

But Ms Conisbee said the market won’t experience the dramatic booming in prices similar to the four years leading into 2016 because of the lack of offshore investors.

“I doubt Sydney and Melbourne are going to get back to double digit growth any time soon,” she said.

“It does look like the worst is over and things will slowly start to improve but I don’t think it will be rapid recovery.”

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