FOLLOWING dramatic drops in property prices in Sydney and Melbourne’s top end of the market, they are now leading the way to the recovery with the regional areas of Geelong, Ballarat and Bendigo also performing strongly.
This has been demonstrated over the weekend which saw preliminary auction clearance rates, as published by CoreLogic, leap from the doldrums.
While both capital cities took a nosedive last year and have been hovering around 50 per cent for the past few months, this weekend saw Sydney’s rise to 66.1 per cent and Melbourne’s to 64 per cent.
RiskWise Property Research chief executive officer Doron Peleg said this showed a clear trend of improvement.
“Clearance rates exceeded the 60 per cent mark and this is strongly aligned with the expected stabilisation in the property market,” Mr Peleg said.
“Labor’s loss at the federal election eliminated the number one risk to the property market and this, combined with the high likelihood of interest rate cuts by the RBA this year, the introduction of the First Home Loan Deposit Scheme and APRA’s proposal to remove the 7 per cent ‘stress test’ replacing it with a 2.5 per cent buffer, will support the bottoming of
the Sydney and Melbourne markets by the end of the year and then a gradual recovery.”
He said the top end sub-regions of Melbourne led the market with the Inner- East delivering 72.5 per cent preliminary
clearance rate and the Inner-South 68.4 per cent.
“Both these areas experienced material price reductions in the recent downturn with houses in Melbourne’s Inner-East dropping by 17 per cent in the past 12 months. While the lower end of the market showed more resilience in the recent downturn, the top end went down significantly, and we are seeing a major change in the trend.”
Greville Pabst Property Advisory founder and chair of WBP Group, Greville Pabst, said that the inner east and south areas of Melbourne had been the hardest hit over the past 18 months.
“Our valuers have reported price weakening in the range of 15-20 per cent, particularly for properties that are in the $2 million-plus price range and other sub-sectors of the market such as new apartments previously sold off-the-plan.
“While the greatest falls have been experienced in inner-Melbourne, this is where the recovery will begin and prices within this inner circle are expected to outperform the general market.”