Home buyers' fear of missing out props up property market amid rate worries
Property buyers continue to flood auctions despite inflation shock, with seven in 10 homes selling under the hammer as fear of missing out drives competition.
Strength in the property market has shown little sign of abating, with buyers continuing to bid on homes at auction despite a string of economic surprises.
Seven in 10 properties offered at auction sold last week, according to preliminary clearance results collated by housing researcher Cotality.
Auction numbers are typically considered a real-time barometer of buyer sentiment. The national result has slipped slightly back to decade-long averages in recent weeks on the official count, though strong buyer appetite has continued to push property prices higher amid a shock rise in inflation, which dashed hopes of any further rate cuts this year.
Cotality director of research Tim Lawless said supply and demand constraints continued to weigh on the market, which was underpinning sales and price resilience. “Listing numbers are still tracking about 18 per cent below average,” he said.
“Even though demand is roughly about average in terms of the number of sales, listings are still way below average. That’s probably the main thing that’s supporting selling conditions and upwards pressure on prices.”
It was the second-busiest weekend for auction activity this year in Sydney and the third in Melbourne, but despite bidders facing more choice than in recent months, competition saw the two largest markets achieve preliminary clearance rates shy of 71 per cent. In Melbourne, buyers advocate Cate Bakos said buyers remained nervous they would miss out on property and possibly be priced out of the market. Prices are beginning to rise again after a prolonged period of sluggishness, with competition heating up between first-home buyers with government support and investors. “It’s more a case of the fear rather than the hunger side of things,” she said. “People are fearful that it could be a lot stronger next year, and they’ll get left behind. That’s why we’re seeing buyer numbers still being relatively strong at the moment.”
National real estate agency Ray White reported an average of 3.1 bidders at auctions, up from 2.6 on the ground last year.
Brisbane had the highest level of competition, with 4.4 groups registering for paddles last week, resulting in a 71.8 per cent clearance rate, according to Cotality.
Adelaide sold 67.7 per cent of auctioned properties.
Not all are anticipating a strong end to the year. Founder of auction house Cooley Auctions Damien Cooley said the Sydney market was proving resilient but showing early signs that buyers may be pausing their property searches until the new year.
“There is a little bit of hesitation out there at the moment,” he said. “My gut feeling is there’s been a fair bit of noise in the market about interest rates, and I feel like there is a little bit of a switch off starting earlier this year.”
Mr Lawless expects clearance rates to continue to trend lower over the rest of the year after clearance rates peaked at the height of the spring selling season, with the market to be tested in the new year.
“This gradual but consistent fade in clearance rates might signal we’re moving through a peak in the growth cycle, or at least the peak in the rate of growth,” he said. “The early year selling season often sees a higher number of listings coming to market, and that will be a real test of demand. With this growing expectation we might not see further rate cuts, and renewed cost-of-living pressures, those factors could start to weigh on buyer sentiment”.
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