Sydney Auction Clearances Hit a 14-Month High

Feb 17, 2017 03:46 AM
Sydney auction clearances hit a 14-month high

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Went for $200,000 above reserve: this four-bedroom house at 174 Albany Road, Stanmore, NSW sold for $2m at auction on ...
Went for $200,000 above reserve: this four-bedroom house at 174 Albany Road, Stanmore, NSW sold for $2m at auction on Saturday. Mind The Gap

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by Michael Bleby

Sydney's auction clearance rate leaped to its highest level in 14 months as record low borrowing costs and low stock levels put pressure on regulators to tighten credit further.

In the NSW capital, the auction clearance rate surged to 86.4 per cent, well above last week's 78.3 per cent and the highest since the first week of June last year, when it was 88.7 per cent, preliminary figures from CoreLogic showed.

There was only a modest increase in Sydney auctions, with the number scheduled for the week to Saturday rising to 654 from 635 last week. A year ago, there were 930.

In Melbourne, where the number of auctions jumped to 785 for the week from 605, the preliminary clearance rate eased to 76.1 per cent from 78.9 per cent.
Preliminary capital city auction statistics, week to 20 August 2016.
Preliminary capital city auction statistics, week to 20 August 2016. CoreLogic

While the final weekly figure may fall once the results of more auctions are collated over the next couple of days, it may stay above the 74.3 per cent of the same week a year ago, when there were 964 auctions.

The combination of cheap money fostered by the RBA, which earlier this month declared the threat of a property bubble over, and low stock levels is pushing the housing market back into risky territory for policy makers - not to mention for ordinary punters trying to buy a home.

But given the patchy regional nature of housing markets across Australia, with the two largest cities booming and other cities weaker, a more effective response would likely come from the Australian Prudential Regulatory Authority, which tempered investor lending by setting a limit for lenders of 10 per cent growth in investor loans, said Shane Oliver, the chief economist of AMP Capital.

If the housing market stayed strong the banking regulator could turn the screw again and lower the growth targets of investor loans to a figure below 10 per cent, Mr Oliver said.

"Sydney and Melbourne are hovering in the mid- to high 70s [per cent]," he said on Sunday.
Dining room of 174 Albany Road, Stanmore, NSW.
Dining room of 174 Albany Road, Stanmore, NSW. Mind The Gap

"It's indicative of a pretty strong market. The latest rate cut gave a bit of impetus to that. But given... the lack of ability the Reserve Bank has to raise rates, they're going to turn to jawboning and focus back to APRA."

Alice LeMessurier, the managing director of stockbroking firm LemSec, on Saturday sold her four-bedroom house in Stanmore, in Sydney's inner west, for $2 million, $200,000 above reserve.

Three bidders took part in the auction for the 174 Albany Road house that opened at the reserve price and was won by a young local couple.

The renovated 1900 house with two storeys occupied 210 square metres.
21 Bettowynd Road, Pymble, NSW. Sold at auction for $2.42m on 20 August 2016.
21 Bettowynd Road, Pymble, NSW. Sold at auction for $2.42m on 20 August 2016. James Rice

"This amazing result is a testament to the resilience of the inner west market and especially the Stanmore postcode," said Belle Property Annandale agent Michael Field.

Of the 1,747 capital city auctions held this week, preliminary results based on 1,485 reported auctions showed a clearance rate of 76.6 per cent, rising from 75.0 per cent last week across 1,471 auctions, CoreLogic said.

A year ago, when there were 2,248 auctions across the seven largest capital cities, the clearance rate was 72.9 per cent.

Weekend results in Sydney and Melbourne add to expectations of a competitive spring market characterised by low stock levels.

Sydney's strong auction rates will not go down even with more stock expected to come on to the market, Ray White chairman Brian White said last week.

Market strength was not limited to Sydney and Melbourne, however.

Clearance rates in Canberra and Brisbane also jumped above their last week and year-ago figures. Auction numbers were down in both cities from a year ago.

In Adelaide, where the number of auctions jumped for the week to 93 - in line with a year ago - from 56, the clearance rate slipped to 66.2 per cent from 68.8 last week.

In Pymble on Sydney's upper north shore, a four-bedroom family house at 21 Bettowynd Road sold at auction on Saturday for $2.42 million, which Savills Cordeau Marshall agent Donna Ferris said was 'substantially' over the reserve price.

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