The market crash was here for a good time, not a long time.
Australia’s property market is showing a surprising amount of resilience as we come into spring.
The Auction market is particularly surprising. Auction clearance rates just posted their strongest result in 12 weeks:
Across the combined capital cities, 62.6% of auctions were reported as sold, up from last week’s 61.5% preliminary result (later revised down to 56.0%).
Melbourne’s preliminary clearance rate fell to 64.9% from 65.9% last week (later revised down to 58.8%). This was its first weekly decline in five weeks.
Sydney recorded a preliminary clearance rate of 63.4%, which was up from 59.7% last week (later revised down to 54.7%). This was its strongest result since late April.
Is it too soon to call the bottom?
One real estate guru doesn’t think so. Tom Panos, a leading real estate agent, sold eight of his nine properties on the weekend at auction. He reckons that we’re very close to the bottom:
“We’re back in business baby… Here is what I am forecasting… If there was a clock, right now, and you have the 12 and six. Where is the market? I reckon we’re at five… We are very, very close to the end of this correction… And to everyone that’s reading out headlines ‘property prices are going to drop 20%’, well wake up. They already have. 15% at least in most areas, some 20%. That correction has happened”…
“So here are the factors that are going to indicate how far we are from the bottom. Because Spring is going to be a test.”
“Number one: we clearly know that fixed rates long-term have come down… That’s sending a message to buyers that interest rate rises are not a long-term chronic thing that we are going to live for. They can tell that it’s a tool that is being used in the short-term to take care of inflation”.
“Number two: the next factor that is going to determine whether we drop another 5% or 7% is supply of new listings. If the supply of new listings becomes high in Spring… Keep your eye on that…”
“Number three: the speed of increase in rate rises and the magnitude of those increases… As rates rise, borrowing capacity goes down… and offers on properties reduces”…
“Number four: The return of investors… They are seeing high yields. There is a rental boom taking place in many areas… Property becomes an attractive asset against inflation”…
“These are the factors. I’m calling it, I reckon we are five on the clock. Not far from the bottom. There’s probably still a little bit [of downside] to happen. Those factors are going to indicate how much more”.
I’m not so sure. I reckon we’ll still see a bit of movement in the official numbers.
But real estate agents are much closer to the ground, and it’s possible that the official numbers are moving with a lag.
Panos reckons we’ve had 15-20% falls already, and the official data is still sitting at less than 5%.
So you never know. We might see a bit more run in the official data, but it might be the case that the bottom is already in, and the next move with clear direction for prices is up.
It wouldn’t surprise me.
JG.