An impressive 81.0% of properties that were put to auction in Sydney over the weekend were sold, according to CoreLogic, confirming the Harbour City’s property market is streaking ahead of the rest of the country.
While the RBA has slashed interest rates to historic lows to stimulate investment in the economy and bring down the Aussie dollar, low interest rates are also fuelling continued gains in the Sydney property market.
Su-Lin Long, chief economist and head of Australian research at RBC Capital Market, told The Australian Financial Review, she doesn’t expect the exuberance to continue, as more stock comes online due to completions and more listing during spring.
“I wouldn’t expect the kind of pick-up we’ve seen in the last couple of weeks to continue in spring,” she said.
“It probably will be reasonably solid, given you’ve had the rate cut, and the labour market is in OK shape. I think the supply side of the story is an important one that shouldn’t be overlooked,” she said.
The number of new property listing in Sydney were up slightly from last week, as vendors get in early before spring, but the number of new listing in Sydney was still down 20% on a year ago.
But Robert Gottliiebsen wrote in The Australian that the changes to superannuation rules mean more investors are looking to property to grow a tax-advantaged next egg. He says the property market is stronger in Sydney now, but he says the gains are likely to spread to other cities soon.
“Clearance rates in other capitals are much lower but that is likely to change because of the government’s structural changes,” he said.
The nation-wide clearance rate was 76.6%, up from last week’s 75.2%, and also ahead of the 73.4% recorded for the same period last year. A total of 2,113 auctions were held around Australia, up from 1,795 the previous week, but lower than the 2,654 auctions recorded for the same period last year.
Saul Eslake told The Australian Financial Review that strength in the NSW economy is also driving the gains.
“Overwhelmingly, the biggest factor is demand,” said Eslake. “Underpinning that increase in demand is the much-improved performance of the NSW economy.”
Most notable is Sydney’s low unemployment rate compared to other capital cities. The latest ABS data showed that Sydney had an unemployment rate of 5% in July, compared with Melbourne’s 5.9%, Brisbane’s 5.6%, Adelaide’s 7.3%, Perth’s 6% and Hobart’s 6.1%. Only Darwin (3.4%) and the ACT (4.4%) had lower rates of unemployment than Sydney.