Capital returns with positive start to home auction market

The 2016 Canberra home auction market is under way with robust results, reinforcing the consolidation of the revival in housing market activity in the past year.

Canberra recorded an auction clearance rate of 66.9 per cent in February, well ahead of the 53.4 per cent rate in December but just below the 69.1 per cent recorded in February last year.

Canberra also recorded a strong increase in the median auction price in February compared with December, lifting 5.4 per cent to $680,000. Median home auction prices in Canberra were 6.6 per cent higher in February compared with same month last year.

Auction listings in the capital also surged in February. An average of 68 was recorded each weekend, well ahead of the 41 average in the same month last year.

Restored confidence in Canberra’s housing market in 2015 was expected to continue to support the strong start to this year’s auction season and solid price growth was likely.

Low interest rates were the catalysts of continuing solid housing market activity in Canberra.

The Reserve Bank decided this week to leave rates on hold in March.

Rates have stayed at the record low 2 per cent for 10 consecutive months, although the prospect remains for a near term cut.

Recent economic data has been disappointing as the ABS national unemployment rate moves back up to 6 per cent, wages growth is the lowest on record and the home building boom peak has clearly passed.

A sustained period of unemployment above 6 per cent will likely motivate the Reserve Bank to cut rates in an attempt to stimulate an increasingly lifeless economy. 

Dr Andrew Wilson is Domain Group chief economist. Twitter: @DocAndrewWilson – My Property, 2UE Fridays 2-3pm, Saturdays 12.30-1pm.