As the spring auction season comes to an end, the housing market seems to be shifting in favor of buyers. CoreLogic’s recent preliminary auction results revealed a combined capital city clearance rate of just 65.9%, a 2.1% decrease from the previous weekend’s results, and a further decline to 62.4% when settled. As we approach the upcoming months, it becomes apparent that selling conditions may continue to soften through 2024.
In particular, Melbourne saw a decline in auction clearance rates, reaching a preliminary outcome of just 64.1%, a drop from the preceding weekend’s 68.0% result. Meanwhile, Sydney’s figures remained somewhat steady, displaying an unchanged preliminary rate of 68.7%.
Upon analyzing the trend in monthly average final clearance rates, we can see that they peaked at 71% in May and have gradually decreased since then, reaching 63% in November. This decline in auction clearance rates coincides with dwelling value growth gradually slowing down. This shift in the market could be attributed to various factors such as a combination of record population demand and the dampening effect of rising mortgage rates.
As interest rates rise, some property investors are finding it increasingly challenging to pay their mortgages, leading them to sell their properties. Consequently, this change in the market is now favoring first-time homebuyers, who are starting to benefit from the increasing number of available properties for sale. While this situation might not be ideal for renters as rental stock in the market decreases, it offers an exciting opportunity for those looking to take their first steps into the property-owning journey.
According to Ray White’s chief economist, Nerida Conisbee, “The market is definitely favouring first homebuyers. There’s a lot of the investors now that are really struggling to pay mortgages in the higher interest rate environment.”
Furthermore, the recent interest rate hike from the Reserve Bank of Australia seems to have put a damper on the previously accelerating house price momentum, another factor contributing to shifting conditions in favor of buyers.
In summary, as clearance rates fall and property value growth slows down, the market is gradually beginning to favor buyers, particularly first-time homeowners. While it may present some challenges for renters due to the reduction in rental properties, it paves the way for prospective buyers to seize opportunities in the current market. Keep an eye on the trends and events taking place in the housing market, as these transitions may present timely moments for those who are prepared and ready to take action.
