Market Recovery Gains Momentum

Posted on 9/07/2019  
Market Recovery Gains Momentum

The housing recovery is gaining momentum as buyers, buoyed by better borrowing conditions, stake their claim in a smaller pool of homes on the market.

SQM Research's Louis Christopher says the recovery is real, based on rising buyer demand in a low-volume market.

With fewer properties available, buyer demand pushed the preliminary clearance rate for Sydney auctions to 78% from the 552 homes listed, according to CoreLogic figures. In Melbourne, the preliminary clearance rate hit 70% across 388 auctions.

Nationally, there were fewer homes taken to auction because of school holidays in most states and mid-winter listings typically lower. The 945 auctions listed for capital city markets around the country returned a preliminary auction clearance rate of 70%, the fourth week in a row that clearances exceeded 60%.

SQM Research's Louis Christopher says most market recoveries he'd observed since 2001 had grown from a low volume market.

"I'm not in the camp that thinks this a bogus recovery because it is based on low volumes so far," he says.

"It is a real recovery. The reason we're seeing the pick-up in clearance rates is that there are more buyers out there due to cuts in interest rates, the Coalition win in the Federal Election and the loosening of credit restrictions by APRA.  

"All this is enough to boost the property market. It's created a trigger for a turnaround "

The prospect of greater access to finance has boosted confidence, as buyers see that lenders ready to open up again.

Changes unveiled on Friday by the Australian Prudential Regulation Authority have given borrowers the chance to access mortgages up to 14% larger. Borrowing capacity has been further boosted by the recent reductions in mortgage rates, following two cuts to the official cash rate by the Reserve Bank.

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