Record auction numbers still not meeting demand

If you ever needed confirmation of the imbalance between demand and supply in the current property market, consider this... Whilst the most common complaint from home buyers right now is that there is nowhere near enough property on the market, figures released by Domain during the week indicated that Melbourne was set to have the second highest number of auctions ever recorded in May today! Clearly the robust and reliable late autumn market in Melbourne is simply not enough to satisfy demand. Just over 1100 homes were set to go under the hammer today, which is up on the 937 conducted last weekend, and well ahead of the 759 listed over the same weekend last year. Today’s auction numbers have only been topped once in May, with the record of 1147 being set on May 31 2014. Unfortunately for local buyers, the number of auctions in the north is still lagging many other areas of Melbourne. Domain was forecasting that Melbourne’s west would be the most active auction market with 195; followed by the inner south with 171, the outer east with 162, the inner east 135, the inner City 130, the north east 121, the north 84 and the south east with 78 auctions. It is important to remember that whilst overall auction numbers are up this year, the clearance rates have remained consistently strong with most weekly clearance percentages being in the high 70’s to low 80’s. Most observers consider clearance rates above 70% to be a sellers’ market. In a report on the market, Dr Andrew Wilson, the Chief Economist with the Domain Group, pointed out that the latest economic data has been underwhelming. National retail sales have been down, reflecting the impact on consumers of low income growth and significant under-employment. With the economy continuing to underperform and the growing prospect of negative economic growth over the March quarter, there is still a chance that we may see further stimulus from the Reserve Bank via a cut to official rate. Indeed, we shared a report on social media this week that Credit Suisse was forecasting that we could see multiple cuts to interest rates later this year. So, the news for home buyers is that whilst we will probably continue to see highly competitive conditions in the local market for the foreseeable future, with demand continuing to exceed supply, we probably won’t see our borrowing costs going up any time soon. For sellers, this all adds up to very good news indeed!