With the end of the June quarter, research by the REIV has revealed that the interest rate increases introduced this year by the Reserve Bank and the additional increases passed on by some of the major banks has placed considerable pressure on the Victorian property market.
The exact nature of the impact will be clear in the REIV median house prices for Victoria, which will be released on the last Saturday of this month, however initial REIV analysis of auctions held has revealed a distinct change in the market compared to 12 months ago.
Over the months of March, April and May there were 11,200 auctions held of which 7,365 or 66 per cent sold. Of those 5,552 sold under the hammer, 1,627 sold before the auction and 186 after.
This makes an interesting comparison to 2007 when over the same three months there were 10,375 auctions of which 8,646, or 83 per cent sold. Of those 6,166 sold under the hammer, 2,072 sold before and 408 sold after. In 2006 the same period saw 8,128 auctions, a clearance rate of 71 per cent and 5,781 selling.
This year’s auction market has been stronger than 2006 with more homes on offer and more homes selling, but still not as strong as last year.
The cumulative affect of a range of economic factors, the most powerful being interest rates, can be seen following the March rate rise, with the subsequent drop of auction listings compared to 2008. The eight week lag between the last rate rise and the impact reflects the time it takes for a homeowner to initiate the sale process which includes finding an agent, undertaking a marketing campaign and auctioning the property or negotiating with potential buyers.
