Andrew Wilson: Strong spring on horizon

The Canberra home auction market strengthened over July and is well positioned for a robust spring selling season fuelled by another cut in interest rates.

Auction clearance rates in the Canberra market increased  over July from 62.7 per cent to 67.4 per cent – the equal highest monthly result for the year and similar to the 68.7 per cent during July last year.

However, midwinter auction numbers were down in Canberra, falling from a weekend average of 44  over June to 30 – but similar to the 31 average over July last year. But overall auction volumes in Canberra are 7.6 per cent higher this year so far compared  with the same period last year – an increase of 107 auctions.

Canberra recorded a median auction price of $626,000 over June – that was lower than the $690,000 result for May and 2.7 per cent lower than the $643,500 auction median reported over July 2015.

Belconnen reported the highest clearance rate of all Canberra regions over July with a solid 76.6 per cent, and the highest listings at 47, followed by Woden Valley with 76.2 per cent, Weston Creek 70.8 per cent, Canberra Central 69 per cent, Tuggeranong 60.6 per cent and Gungahlin with a clearance rate of 50 per cent. 

The Canberra weekend auction market also finished July on a high note, recording a clearance rate last Saturday of 68 per cent from 29 reported auctions with a median price of $730,000.  

Low interest rates are a key driver of robust auction markets and rising home prices, with the cut to official rates in May enhancing buyer momentum.  This week, the Reserve Bank decided to again cut rates to a new low 1.5 per cent with another low inflation rate recorded over the June quarter a clear catalyst for the  bank’s decision.

With banks passing on lower rates to mortgage holders and prospective home buyers, rising buyer activity and overall solid market confidence  are set to be maintained  until spring.

Dr Andrew Wilson is Domain Group chief economist. Twitter: @DocAndrewWilson