Bidders step up in June and clearance rates shoot up.
Over the 5 weekends of June more than 2,432 auctions were reported to the Real Estate Institute of Victoria (REIV). There were approximately 1,208 sales at auction. 654 properties were passed in, 292 on a vendor bid. The clearance rate averaged 67.5%, shooting up from May’s 62.5% and April’s 56.5%.
Melbourne’s clearance rate climbed steadily every week in June as bidders become increasingly keen at auction and less dependent on post auction negotiations. Volume is lower though compared to June 2018 which had more than 3,532 auctions.
According to Domain’s newly released Property Price Forecasts this change of mood is is likely to help speed price stability and a likely return to value growth in 2020. But the ‘Domain Property Price Forecasts’ predicts a conservative recovery only for Melbourne, with a 1% rise in house values by the end of the year and a 1% to 3% rise in 2020.
Sydney prices are expected to bounce back more quickly, with an expectation of a 3% to 5% rise across 2020. Domain’s crystal ball predicts at the end of 2020 Melbourne house prices will still be sitting about 10% under their 2017 peak.
It’s likely to be a gradual recovery in Melbourne because households are wary about loading up with more debt. Affordability still remains a problem and wages growth will remain slow. People have just experienced a major setback in home values and the warning bells are still echoing for many.
How quickly has Melbourne recovered from corrections in the past?
Melbourne home values are presently 11.1% lower than the peak in 2017 which is the deepest correction since 1980. While Melbourne has had a few notable corrections since May 1989, these were generally shallow and a quick recovery followed. The big exception was the major 1989 downturn where dwelling values didn’t recover until 1997. Economic conditions are much better now than they were in 1989, but this shows with a major correction it can take 8 years for Melbourne values to claw back to where they were.
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