The Sydney’ auction clearance rate recently fell to its lowest in 10 years with only 39.4 percent of homes selling in the auctions. Last week, the preliminary auction clearance rate was 44.5 percent, but now it has been revised to 39.5 percent.
The CEO of Ray White Estate Group, Mr. Jason Andrew said it's a game of real estate tug of war in which the sellers want as much as they can get, buyers are listening to the overall sentiment in the market, and market value of properties are somewhere in between both the buyer and the seller. The current property downturn is affected by the increased regulation which has limited the accessibility of credit and forced the investors to retreat from the market.
Recently, QBE Housing Outlook report stated that house prices of Sydney are expected to witness a further fall of 3.5 percent in CY 2019 and it is expected that the momentum will build up in 2021. Melbourne is expected to witness a sharp decline with respect to the house prices of 4.2 percent in FY 2019. The main reason which has been impacting the housing prices is the increased regulation by the banks which have been impacting the borrowing behavior of the housing investors. Due to which, the housing market has been experiencing the negative impact as auction clearance rates witnessed a steep fall. The strong downward momentum was experienced in the September quarter of 2018 as housing prices declined by 2.6 percent in Australia.
Melbourne and Sydney which are Australia’s largest and most expensive housing markets are witnessing an increase in their housing auctions and the property market is expected to face a stern test in the upcoming months as the lot of new listings are going to hit the market soon. The rise in the home prices in the past 12 months, is also a reason behind the declining auction clearance rate. The median home price of Australia has declined in each of the past 12 months and it is expected that the home price will fall further in the upcoming month. It is expected that the falling home prices could result in creating more pressure in mortgage arrears in the upcoming months. On the basis of the latest data, the prices are neither accelerating nor they are slowing down at this point.
The average numbers of days it takes to sell a home have also increased from 47 days a year ago to 76 days now. Due to this, the homeowners are getting hesitant to put their property on sale in the current climate.
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