Brisbane auction market steadies – but rates on hold

Activity in the Brisbane housing market remains relatively modest overall, with the prospect of a typical end of year revival.

Brisbane’s home auction clearance rate increased slightly over October to 48.3 per cent, compared to the 48.1 per cent recorded over September. The local rate remains well ahead of the 42.4 per cent recorded over October last year.

Rising auction volumes have been a characteristic of the market for most of this year and October continued the trend. There was an average of 127 auctions per weekend, up from the 123 averaged over September and well ahead of the 100 averaged over October last year.

The median auction price fell sharply over the month, dropping by 3.6 per cent to $684,750, but is up by 1.4 per cent compared to the $675,000 recorded over October last year.

A sustained revival in the housing market has been impeded by recent rises in home mortgage rates for both investors and owner occupiers as a result of actions by the financial regulators.

The Reserve Bank has decided to leave official interest rates on hold over November, at the record low rate of 2 per cent. Rates have now been steady at that level for the past six months, although the case for a cut has strengthened recently.

September jobless data was disappointing, with the national unemployment rate above 6 per cent now for 16 consecutive months. The trend for home building approvals has now fallen for six months, lower than expected inflation data largely reflects a stagnant economy, the dollar remains seemingly intractable, the stockmarket has failed to make significant headway after sharp falls in recent months and dark clouds are now gathering over the international economy.

Meanwhile, concerns of overheating housing markets in Sydney and Melbourne are clearly a thing of the past, with price growth now sliding fast.

The bank decision to leave rates on hold will disappoint mortgage holders and prospective home buyers grappling with higher interest rates, and the retail sector looking for a boost in pre-Christmas sales in a fading economy.

The local economy would also welcome lower interest rates with the ABS Brisbane September jobless rate rising to 5.4 per cent but encouragingly well below the 6 per cent recorded over September last year.

Growing concerns over the level of local economic growth and sharply diminishing activity in housing markets is likely to keep the Reserve Bank focused on the possible need for further stimulus through additional cuts to interest rates. A short-term cut would be unequivocally good news for the Brisbane housing market.

Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson