Hopes of rate cut fail to lift property
From: The Australian
August 18, 2008
THE prospect of a cut in official interest rates next month has failed to bolster the nation's property market with weekend auction clearance rates taking another hammering.
In Adelaide, auction sales have all but stalled with the clearance rate falling to 11 per cent, well down from last week's 47 per cent and drastically below the 83 per cent recorded for the same weekend last year.
Property research group Braxton Chase head Stuart Palmer said speculation of an interest rate cut wasn't enough to encourage buyers yet.
"They want to be sure, it's not enough for it just to be likely, it's still too early for us to expect a change in auction results," he said. "If they do drop we will see a revival in the market for sure, but it might take a while for it to change the results for domestic property."
However, Mr Palmer said auction figures only showed part of the story with private sales and off-the-plan sales still strong.
"They don't account for off-the-plan, our research shows the market has fared really well in this regard over the last quarter," he said.
"This is a very good time for investors and smart investors are already making the most of the expected rates cut."
The clearance rate in Melbourne was below 50 per cent for the second week in a row.
The clearance rate of 49.3 per cent was down 0.6 per cent from last week and well below the 83per cent recorded for the same weekend last year.
In Sydney the market showed a slight improvement - the clearance rate of 48 per cent was up two percentage points from last week but was still dismal in comparison with the figure of 69per cent recorded for the same weekend last year.
Mr Palmer said that buyers were forgetting expected price rises for property in Sydney did not account for the diversity in the market.
"Lots of home buyers don't realise that it is a case of a tale of two Sydneys," he said. "While prices will increase in some areas, in others they will be sliding."
The market in Brisbane once again defied early predictions of a solid year.
The clearance rate of 22 per cent was down, 3 percentage points from last week and more than 20 percentage points lower than the figure recorded for the same weekend last year.
"Brisbane had such a strong year last year and after such a boom you expect a slowdown," Mr Palmer said.