April 13, 2023 by Dymphna

Property prices lift. Is the data just wrong?

Austions are heating up. What does that mean for the rest of us?

When Corelogic’s data showed that prices in the capital cities had not only stopped falling, but had actually risen 0.6% in March, a lot of pundits were sceptical.

Surely, bigger price falls were on the cards. We were due. Must be something wrong with the data.

When when you take the other property market into account, it’s all starting to tell a fairly consistent story.

The stock-on-market, the days-on-market, rental prices, and particularly, what’s happening in the auction market.

The AFR was reporting the other day that some auction results were blowing reserves right out of the water:

Sellers of the five-bedroom, three-bathroom oceanfront home at 97 Bilga Crescent, Malabar, in Sydney’s east were among the biggest auction winners over the weekend after the house was sold for $4.52 million, $320,000 above reserve.

Selling agent Nader Hotait of Ray White Eastern Beaches said the buyers were from Indonesia and bought the house over the phone during the weekend auction.

A four-bedroom, three-bathroom house at 29 Edmund Street, Lindfield, in Sydney’s upper north shore also delivered strong results to sellers, after selling for $3.79 million, which was $240,000 above reserve.

In Melbourne, a four-bedroom, two-bathroom house at 16 Village Avenue, Doncaster, sold for $1.63 million, which was $430,000 above reserve.

Got to be happy with that.

In part, this is about what’s happening in the premium market. The top-teir of the market always turn first, and lifts quickly. Corelogic reckon that some prices in some premium suburbs have lifted more than $610,000 in the past three months:

The value of Sydney’s more expensive homes climbed by as much as $610,000 over the three months ended March as the earlier than expected recovery in the top-end segment accelerated, new data from CoreLogic shows.

Premium homes on the upper north shore, eastern suburbs, inner west and the Hills district notched the largest increases, fuelled by the chronic shortage of stock and rising demand from buyers looking to take advantage of lower prices.

But even still, that $1.2m, sorry, $1.6m now property in Melbourne is not far off the Melbourne median.

And the truth of it is, that auction clearance rates are strong, and consistent with strong price growth going forward:

Growing confidence that the housing market is getting close to the bottom of the cycle has fuelled strong auction results around the country as volumes rose to their highest levels this year, preliminary data from CoreLogic shows.

Tim Lawless, research director of CoreLogic, said Sydney and Melbourne were now achieving auction results higher than their long-term average of 69 per cent and 67 per cent respectively.

“The trend is clearly evolving into one that looks like a recovery trend. Clearance rates are holding strong, and even in the private treaty sector we’re seeing less discounting from vendors as well.

“Vendors are in a much better position now at the negotiation table, probably because they don’t have a great deal of competition from other vendors.”

When you chart it out, there’s a clear relationship between auction clearance rates and price growth.

And the recent lift in clearance rates is consistent with rising prices.

Prices should continue to post solid gains in the months ahead.