Clearance rate slides on investor crackdown
A rise in the number of homes on the market and new regulations for investors have led to a softening in Sydney’s auction clearance rate, which was 12 percentage points lower on the weekend compared to the same period a year ago.
The city recorded a 69.4 per cent preliminary clearance rate for 897 auctions, according to CoreLogic, compared with an 81.6 per cent clearance rate over 815 auctions on the corresponding weekend last year.
National auction market commentator Kevin Brogan said several factors had contributed to Sydney’s low clearance rates over the past year.
“Clearly we are now in the third weekend of the spring selling season and what we have definitely seen in Sydney is more stock coming onto the market. That’s something which you are seeing in Sydney but not so much in Melbourne,” he said.
“One of the other factors is the new regulatory environment for investor borrowers ... the limits on interest-only loans and a round of interest rates being increased for investor finance.
“In Sydney more than 50 per cent of the market activity is investors. So the Sydney market would be the market you would expect to be most impacted by re- strictions on investor borrowing.” However, Mr Brogan said strong clearance rates were being recorded in traditional owneroccupier areas of the city, which supported the idea that the banking regulator’s crackdown on investor activity was the driver behind the trend.
“When you look at areas where traditionally you have some really strong auctions results — North Sydney, Hornsby — preliminary clearance rates were 77.88 per cent, with a reasonable volume of sales in that location. The eastern suburbs recorded 78.82 per cent. These are really quite desirable, owneroccupier, high-value suburbs, and they are really doing quite well. It maybe supports a view that it's the headwinds faced by investor purchases which might be having an impact on the market.”
Nationally, the housing market last week recorded its busiest auction activity since the beginning of June, after a slow start to the spring selling season.
Melbourne had the highest volume, with 1268 auctions and a clearance rate of 73.6 per cent, higher than last week’s 71.8 per cent but lower than last year’s 77.8 per cent.
Brisbane’s clearance rate was just 49 per cent, higher than last week’s 38.8 per cent, and Adelaide recorded a solid 75 per cent preliminary rate, up from 66.2 per cent the week before.