The property market continued to steam ahead this week with the national clearance rate across the combined capitals rising to 78.4% from 77.5%. The number of auctions was also up – to 2470 from 2232 the previous week.
There was also a near 10-percentage point jump on last year’s clearance rate of 67.1%.
Capital city auction statistics (preliminary)
[1]Sydney edged nearer to the 90% mark this week, with 86.9% of 770 auctions captured by Core Logic RP Data going under the gavel.
That result is up from 85% last week and 73.1% this time last year. Buyers are looking to the Inner West of Sydney, with this Sydney sub-region receiving the best clearance rate of 94.7%.
Weekly clearance rate, Sydney
[2]In Melbourne, the clearance rate edged higher to 80%, up from last week’s of 78.3%. At the same time last year, its clearance rate was significantly lower at 66.6%.
The best performing sub-region in Melbourne this week was the Outer East, where 87.3% of reported auctions were cleared.
Weekly clearance rate, Melbourne
[3]So what’s heating up the property market? Senior research analyst at Core Logic RP Data, Cameron Kusher, told Switzer Home Loans that while low interest rates are part of the equation, the growth in investment lending [4] is one of the major drivers of the strength in the growth of Sydney and Melbourne values.
“The latest housing finance data to March 2015 shows that investment housing finance commitments rose another 6.4% to be 20.9% higher over the year. At the combined capital city level, home values started to increase in this current phase from a low in May 2012. Over the current growth period, Sydney home values have increased by 40.2% and Melbourne by 24.5%,” says Kusher.
Kusher also reminds investors to think about potential rental yield, not just capital growth, when considering a purchase.
“Although the growth in values is much stronger in Sydney and Melbourne, these cities also have the lowest rental yield profile. While it is fine to focus on capital growth while it is strong, we would alert investors in these two cities that growth won’t remain strong forever and they should also pay some consideration to the current yield and the yield potential for their investment properties.”
Capital city private treaty median prices
[5]Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.