Interest rates up in October. Clearance rates dip.
Over October’s five weekends there were in excess of 4051 auctions reported to the Real Estate Institute of Victoria (REIV). More than 2917 sales were recorded. Approximately 1134 properties passed in with 495 of those on a vendor bid. The clearance rate for October averaged 70.3%.
The big news in October was about the big four banks raising interest rates, shortly before announcing mammoth profits – developments that will only please their shareholders. The rate increases add to the other pressures applied by the regulators to cool the market – that is, tightening of loan to value ratios for investors, deterrents for using superannuation to buy investment property, and increased taxes on Foreign buyers.
With many investors having had their wings clipped, we are now seeing the lowest clearance rates for this year. Values however, are holding strong in Melbourne. Agents report price growth was strong in October in middle to outer suburbs as more people look for opportunities further out.
Grand Final weekend was very quiet as usual with just 44 vendors hoping to sell, but a clearance rate of just 63% was achieved. Sellers also normally avoid the pre-Melbourne Cup Weekend but this year many vendors bucked that trend and joined the race to sell with 435 auctions and a clearance rate of 67%. People are keen to act now and be organised for Christmas.
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