National Auction Figures Still Strong
Last weekend's auction results show demand for property is still high.
Real Estate Institute of Victoria (REIV) CEO Enzo Raimondo reports that in Melbourne a clearance rate of 85 per cent was recorded during the weekend of 13 and 14 February from 395 reported auctions.
The dearest, $ 2,560,000, a three-bedroom house in South Yarra: The cheapest $180,000, a studio apartment in Galldon.
This is the strongest weekend result for five years and Raimondo maintains it highlights the overall lack of supply.
He predicts that stock levels will increase over the coming weeks – to around 1000 a fortnight. However there is an underlying issue with the number of homes on offer for sale.
Raimondo says; "low stock levels have two impacts, high clearance rates and higher prices as multiple parties compete at auctions".
The REIV received reports of 785 homes sold by private sale over the week.
Australian Property Monitors notes that on Saturday 13 February Sydney outdid the previous Saturday (despite the rain) recording a clearance rate of 69.7 per cent, up from 66.7 per cent last weekend and 64.4 per cent last year.
Sydney's total auctions topped $100 million. The dearest, a four-bedroom house in Kangaroo Point went for $3,425 million; the cheapest a three-bedroom house in Tuggerawong for $260,000.
During the same weekend Brisbane scored an auction clearance rate of 32.3 per cent, up from the 26.5 per cent recorded the same time last year.
Adelaide outdid Brisbane with a clearance rate of 65 per cent, trouncing last year's 29.4 per cent.
All this points to a buoyant year ahead for the property market and a continuation of the housing boom – despite the threat of more interest rate hikes.
Australian Bureau of Statistic figures reveal that the total value of owner occupied housing commitments excluding alterations and additions decreased by a seasonally adjusted 4.7% in December to $15.5 billion, which bodes the question, are interest rates starting to bite and will the trend head further south when the Reserve Bank does what is widely expected and lifts the cash rate next month.
Economists got it wrong last month when they forecast that rates would rise. Is RBA governor, Glenn Stevens' decision likely to be affected by the International Monetary Fund (IMF) chief economist, Olivier Blanchard, who has come out and said that countries should increase inflation targets to 4 per cent, up from 2 per cent, in order to make monetary policies more effective?
Currently the Reserve Bank of Australia's inflation target is set between 2-3 per cent.
Blanchard has released a paper that explores the case for higher inflation targets.
In it he argues that central banks have been setting their inflation targets too low, which has sparked a debate worldwide.
The world is still pondering the global financial crisis and why/how most economists failed to see it coming and this challenge to central bankers and the way they manage economies is a powerful and contentious rethinking of macroeconomic policies.
As ABC AM's Peter Ryan points out: "Right now stable and low inflation is the primary target of central banks.
"But according to the IMF's chief economist, Olivier Blanchard, inflation targeting shouldn't be the only tool. He says stable inflation might not be sufficient and that low inflation actually lulled many economies into a false sense of security in the lead up to the global crisis."
Ryan goes on to say: "At the moment there is already very big debate about the link between government spending and higher interest rates. We will find out a bit more this week when the Reserve Bank governor Glenn Stevens faces the house economics committee on Friday".
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