rpdata.com Market Activity Index
	Industry Market Wrap
	Article: Auctions on the rise
	Commercial: Trifecta of sales
	Blog: Is Australian housing really that over priced?

A slight bounce upwards in the weekly rpdata.com Market Activity Index last week shows that industry professionals remain very active in the market. The weekly index, which monitors activity from real estate professionals on the rpdata.com platform, has risen by 14 percent since the start of June and has remained above 110 points since the last week of August.

The Reserve Bank of Australia released the minutes of their October board meeting earlier this week, providing an insight into the deliberations behind the recent decision to lift the official cash rate from 3.0 percent to 3.25 percent. The minutes provide a valuable insight into how the Reserve Bank Board views the domestic and global economic conditions and how their views translate into changes in Australia’s monetary policy. The minutes highlight the improved economic prospects of major regions around the world with particular attention given to the improved outlook for our major Asian trading partners.

Summing up the domestic economy, the RBA minutes state “Growth forecasts were tending to be revised up. Measures of both household and business confidence had recovered, household spending had remained relatively resilient, house-building activity was in the process of picking up and the risks of a sharp contraction in business investment had receded noticeably.” The RBA minutes also made specific reference to the Australian housing market, referencing the August results of the RP Data-Rismark Home Value Index with housing values up 2 percent over the month. Additionally, the minutes clearly suggest there is some growing concern amongst the RBA board about the medium term outlook for inflation, with the board suggesting inflation could start rising again in 2011.

In balance, the board minutes reveal there is still some caution about the durability of the recovery, particularly as domestic stimulus measures are wound back. The economic prospects of the major economies around the world, although mostly improving, are still uncertain.

The final decision to lift the cash rate by 25 basis points was based on the risk of another downturn being relatively minimal compared to the improvements in the health of both the domestic and global economies: “Overall, members concluded that, while downside risks to the domestic economy could not be ruled out, they had diminished significantly over recent months. This meant that the balance of risks was now such that the current very expansionary setting of policy was no longer necessary, and possibly imprudent.”


Weekly Key Statistic - House and unit Values
Over the last year every capital around Australia has recorded an improvement in housing values with the largest increases being in the cities of Darwin (houses +27 percent and units +15 percent) and Melbourne (houses +8.9 percent and units +11.2 percent).

Brisbane, Adelaide and Perth remain the markets recording the most subdued levels of growth, however these markets have well and truly outperformed the national average over the longer term.

The September results for the RP Data-Rismark Home Value Indices will be released next Friday October 30th.

 

 

Latest National Auction Clearance Rates
The major auction markets returned another week of strong clearance rates, with the national weighted average auction clearance rate now remaining above 70 percent over the last 15 weeks. This is in stark comparison to the same time last year when fewer than 50 percent of auctions were clearing.

Want to know the auction results for your local area? Login to rpdata.com  and go the Auction Results panel on the top right corner of the home page.

Advertised Stock On The Market
New stock additions to the market remain reasonably high with about 48,400 new real estate listings added to the market over the last month. This level is slightly lower than last month when 50,630 new properties were added to the market. The total amount of stock advertised for sale has been falling consistently since peaking at 243,500 homes advertised for sale in October last year. Over the last month there were 204,546 homes advertised for sale – an overall stock reduction of 16 percent from the peak.

Want to know what is happening in your local patch? Make sure you have subscribed to rpdata's On the Market® service. Click here or phone 1300 734 318 for a free 2 week trial.

Around Australia, property auctions have enjoyed very buoyant conditions with more than 70 percent of auctions selling under the hammer week on week for the last 15 weeks running.

The number of auctions held across Australia has increased consistently since the first week of August when just 817 auctions were held. The last week of September and first week of October saw a slight reduction in auction volumes due to Grand Finals season, however the number of auctions scheduled for this weekend is set to be one of the largest, with 1,670 auctions scheduled.

As auction volumes have ramped up, so too have auction clearance rates. The national weighted average has been above 70 percent for the last 15 weeks.

 

Auction clearance rates are often used as a timely barometer of real estate market sentiment. When clearance rates are high we can assume that there is a healthy level of optimism amongst buyers and that vendor expectations about the value of their property is aligned with buyer expectations. On the flipside, when clearance rates are low we can generally infer that home buyers are more cautious and vendor expectations may not be aligned with market conditions.

Clearance rates have more relativity to some markets than others. Arguably, they are most relevant to the Melbourne and Sydney market where 85 percent of the nation’s auctions are held each week. In Brisbane, auctions account for just over 7 percent of all auctions nationally, followed by Adelaide at 4 percent, Canberra at 2.7 percent and Perth at 1.6 percent. Tasmania and the Northern Territory account for less than one percent of the overall auction market.

RP Data calculates clearance rates based on the ratio of ‘cleared’ auctions to those auctions that did not ‘clear’. Cleared auctions are counted as those that sell at auction, before the auction or within two days after the auction. Uncleared auctions are those that are either passed in or received a vendor bid only or those that were withdrawn from sale in the week prior to the auction. We collect our auction results directly from the real estate community via our in-house call centre and from our subscribing real estate agents who submit their information directly . Each week RP Data collects, on average, 85 percent of auction results before publishing our results on Thursday morning every week.

At the capital city level, auctions as a method of sale are most popular within Melbourne where 29 percent of homes advertised for sale are auction listings – more than double the national average of 14 percent. At the other end of the spectrum are Perth and Hobart where auctions are very much the exception with less than 3 percent of homes being sold under this method.

Generally, auctions as a method of sale are most popular with prestigious properties or those that have unique characteristics where it is difficult to determine a market value. The most popular auction markets tend to be areas with very high housing values such as the Yarra, Glen Eira and Darebin council areas of Melbourne and the Waverley and Woollahara council areas of Sydney.

The auction process relies on a solid marketing campaign to ensure the auction date is well publicised and prospective buyers have time to inspect the property and arrange for building and pest reports.

For those buying a property at auction, it can be difficult to know how much to bid, which is why doing your due diligence is of the utmost importance. There are a variety of options available to gauge the value of a property including researching comparable recent sales or obtaining a valuation on the property (AVM’s, which are automated valuations generated based on a computerised algorithm, are becoming an increasingly popular and cost effective solution).

 

Agents of Sutherland Farrelly have sold three Victorian properties of varying types in three different auctions over the past week.

A retail and residential building at Footscray, a performing arts school in Eltham, and an office and residential building in West Melbourne have all recently been sold via auction.

A partially-redeveloped three-storey building at 232 Nicholson Street, Footscray, with retail and residential space sold at auction for $1.82 million.

I’m writing this blog entry from an internet cafe in Riga, Latvia as I am lucky enough to be on a month’s holiday. My previous stop was St Petersburg and my tour guide provided a very interesting insight into the local property market which I thought I’d share with you. Of course these are just details which I received from her but she seemed fairly knowledgeable and provides a good analysis.

St Petersburg is a city of around 5 million people let’s say it’s similar to the size of Sydney. No one in St Petersburg lives in a house; in fact I didn’t see houses until I was 40 kilometers outside of the city.

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