With auction clearance rates likely to be down to the 30 percent range the housing market has sunk to a new low, after a terrible weekend for vendors. Sydney is now hitting an all-time low for this downturn and would likely continue into next year, there will be a further deterioration of prices and further tightening of lending Once the full report from the royal commission into banking is out. When Sydney auction clearance rates hit the 30 percent range according to analyst Louis Christopher, there had only been three previous occasions. These were when the cash rate hit 17 per cent in July 1989, when NSW introduced vendor stamp duty in May 2004, in the global financial crisis of November 2008.
From their peak this time last year, home prices in Sydney are down 6.1 percent. Results were not great either, in Melbourne coming in at 48.6 percent. At 213 Beaconsfield Parade, the most expensive property sold in Melbourne was around $5.3 million, over the weekend which is a four-bedroom terrace house.
The investor confidence has been affected by a lot of negative media and have dropped out of the market while there are a fewer foreign buyers out there, but it takes only one buyer to get the result. Down from $485 million at the same time last year, over the weekend just $160 million worth of homes were sold in Sydney, where fewer properties were auctioned and a higher proportion withdrawn.
Morgan Stanley expects home prices could fall by as much as 15 percent quoting tighter credit conditions and has revised its outlook downwards among weakening economic signals. While AMP Capital, based on the persistently low auction clearance rates expects a decline of 20 percent in Sydney and Melbourne, along with tighter credit and under a federal Labor government, reduced capital gains tax deductions for property investors and negative gearing.
With 2119 homes auctioned across the combined capital cities, over the week which was up from 1851 over the previous week, CoreLogic reported that there was an increase in auction volumes although lower than this time last year of 2519. It also noted that for the full week preliminary results showed a clearance rate of 49.8 percent up from 47 per cent last week, which marked the fourth consecutive week where the clearance rate has been below 50 per cent at the same time last year it was at 64.7 per cent. Driven by the owner-occupier market, there are still some surprisingly good auction results.
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