Auction clearance rate down, agents, vendors still comfortable
In a sign our property market is not invincible, on Saturday 21 November Domain reported Canberra recorded a 73% preliminary auction clearance rate. Just under three-quarters of properties selling under auction conditions in most markets would be a fantastic result, however, after months of strong results in Canberra it looks a little disappointing. Could this be an early sign of growth in values slowing?
Keeping an eye on the median result is an early indicator of where the market sees values are heading. On Saturday 21 November, the median auction sale price was $960,000 and has remained above $900,000 throughout November. This shows the market is comfortably pricing in significant increases to property values. Moderation of the preliminary auction clearance rate from its dizzying height of 92% the week prior is likely due to vendors and agents being sufficiently comfortable with the strength of the market to aggressively set reserve expectations on the basis of if the property fails to sell on auction day, market demand will generate a sale shortly thereafter.
Last weekend, the first signs buyer urgency was emerging from people who have been casually researching the market suddenly realising they have less time than they anticipated to secure a property and receive their $25,000 HomeBuilder Grant. From Thursday 26 November, buyers have seven days to make their decision and have time to exchange contracts in 2020 to secure the grant. Waiting to issue paperwork past this point leaves too much margin for error should anything unforeseen delay the exchange process.
Buyers who were looking in July, August and September are facing vastly different market conditions now compared to when they started researching the market. Lack of quality apartments and townhouses to choose from combined with heavily pre-sold existing projects plus increasing values illustrates the importance of acting decisively and entering the market as soon as you can afford to.
I anticipate high sales volumes will occur in the off-plan market for the duration of 2020 and carry momentum into 2021. A large cohort of buyers who do not fit the strict criteria for the HomeBuilder Scheme and intend to reside in their new property are actively taking advantage of stamp duty discounts and concessions they may not have otherwise been eligible for. Incredibly low borrowing costs, low rate of unemployment, lack of stock and high personal incomes look to collectively play an important role lifting residential property values.
With Sam Dodimead, local property professional and host of Canberra Property Podcast where you can get to know the consultants contributing toward deliver of new buildings. Stream from wherever you listen to podcasts.
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