Can High Auction Clearance Sustain the Property Market On its Own?

auction clearanceIn an article for the website Property Observer, Robert Larocca sheds light on the high number of auctions held this year. In comparison to the last few years, Sydney, Tasmania and Adelaide have sold 63%, 56% and 48% more homes this year in auctions.

Sydney’s phenomenal auction clearance figures

Sydney’s auction market has given the best signals so far with 76.2% preliminary clearance reported this week.

You can read the original article here.

Sydney has kept the top gear going for some time now

Exactly a year ago, I had written an article wherein I had stated how Sydney had posted twice the annual growth compared to the other areas. It was kind of special how Sydney’s 7.3% had outstripped the pan-Australian average of 3.48% by a full 100% back then.

The truth behind auctions has to be analyzed

All this said, I firmly believe that a well-heeled auction clearance scene cannot singly keep the real estate momentum going. Moreover, we will have to rationally analyse just how much of this is at-auction clearance and how many go up to the next level of hushed-up private treaties (of course, when the calls do not match up to the reserve bids).

What else factors in?

I am pretty sure the low interest rate environment is going to persist for at least some time and this, having considerably fuelled the buyers already, will keep on raising the auction clearance rates. Shortage of freely available land and lifestyle changes (add to it demographics and gentrification) will make Sydney even more special in times to come and the auction clearance rates as well as time-on-market will show us even buoyant numbers.

Off the note, even the off-the-plan constructions are not doing badly and this more than the auction clearances will give the government peace of mind (after all their cash rate move has brought the construction industry out of slumber).

What according to you is the biggest driver of value growth?