The auction clearance rate slipped under 80% for the first time in seven weeks on the weekend, at 79% on both the RP Data and APM measures.
Melbourne picked up some of the slack – not that Sydney’s 79% is anything to be sneezed at – recording a clearance rate of 77.5% according to RP Data and 77.7% according to APM (see table 1 below).
[1]The RP Data combined capital city auction clearance rate was also robust at 72.1% up from the adjusted 70.4% for the previous week (see graph 1 below). There were a total of 1,553 auctions held in capital cities over the week, compared to 1,470 the previous week.
[2]The APM auction clearance rate for the previous week for Sydney was 76.4% and for Melbourne was 72.9% (see table 2 below). The adjusted figures also show a much higher number of auctions for Melbourne with 688 listed and 497 reported.
[3]The same time a year ago auction clearance rates were gradually starting to recover, or at least steady out, with both Sydney and Melbourne hitting the 61% level. Total value sold in those two capital cities were both $100 million short of what is currently being sold over the week (see table 3 below).
[4]Boom or crash
Last week, some companies in the housing construction and materials sector were questioning whether the record low interest rates were filtering through to housing, and construction of new dwellings.
UBS Investment Research expects a slight increase in dwelling commencements to 154,000 in 2013 (up from 152,000) and to 160,000 in 2014 on the back of lower rates and recent hot auction activity. UBS economists Scott Haslem and George Tharenou are also predicting a 10% increase in house prices over this calendar year. Resident Switzer Expert Charlie Aitken is also predicting a property boom for the East Coast of Australia at least.
There is also some interesting housing data out this week, which will reveal further trends. On Wednesday the ABS releases its comprehensive data on Housing Occupancy and Costs. Utilisation – i.e. the number of people using each house – is on the increase, which CBA chief economist Craig James says may be part of the reason home building has been restrained. Experts will be watching to see if the data, for the year to June 2012, continues to display a rising utilisation trend.
Housing Industry Association data on new home sales for July will be released on Thursday and UBS is forecasting a 3.4% increase, while CBA says there is a modest recovery in construction underway.
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Also in the Switzer Super Report:
- Peter Switzer: Be a realistic optimist [5]
- Rudi Filapek-Vandyck: Buy, Sell, Hold – what the brokers say [6]
- James Dunn: Curtain call – supermarkets and airlines slug it out [7]
- Fundie’s Favourite: A small cap to get excited about – ASG Group (ASZ) [8]