 First home owners do not usually enter the auction market
The auction market is beginning to feel the crunch as the rising interest rates prevent prospective buyers from spending on mortgages. More buyers back off from completing a deal while variable mortgage hit eight percent.
According Matthew Bell, Australian Property Monitors economist, the auction market is indeed slowing down affecting much the expensive properties.
First home owners do not usually enter the auction market for their first purchase, while majority of the auction market players are upgraders and investors, Bell explicates.
Bell doesn't expect price to go down despite the demand for property coupled by shortage of housing and population growth.
"I don't think we'll see price falls. I think we'll see cooling and moderated growth, but those interest rate rises aren't going to cause the market to fall. When we hit that 7.5-8% variable mortgage rate, that's traditionally when confidence takes a hit," Bell says.
Real Estate Institute of Victoria recorded a clearance rate of 78% in Melbourne. According to chief executive Enzo Raimondo the demand on properties are affected by three factors which are interest rate hike, affordability concerns and stock levels.
Nevertheless, Melbourne’s outlook is good as there were 841 auctions reported, of which 655 were sold.
In Sydney, clearance rates went down to 69% with 220 properties sold out of 299 on the market.
In Brisbane, clearance rate went rock bottom at 27% with only seven properties sold out of 27.
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