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RP Data Market Update 5 Feb

The Australian Bureau of Statistics (ABS) released building approvals data for December 2013 earlier this week. There is a lot more analysis of the data in the main Property Pulse article this week however a quick summary of the statistics is provided below. The number of dwelling approvals fell by -2.9% in December 2013 with private sector house approvals falling -3.4% and private sector unit approvals -1.2%. Despite the monthly fall, year-on-year there has been a sharp rise in dwelling approvals. Approvals are 21.8% higher year-on-year with private sector house approvals 17.8% higher and private sector unit approvals increasing by 29.3%.

RP Data and Rismark released the January 2013 results of the Home Value Index earlier this week. The Index showed that combined capital city home values increased by 1.2% over the month and they are 9.8% higher over the past year. Over the month home values rose across each capital city except for Adelaide where they were unchanged and Perth and Darwin where they fell. Over the past 12 months, home values fell in Hobart but rose in each other city ranging from a 2.5% increase in Adelaide to a 13.4% increase in Sydney. The Reserve Bank’s (RBA) Board held their first meeting on Monetary Policy earlier this week. At the meeting, official interest rates were kept on hold at 2.5% it was the sixth month in a row that no change to the cash rate had been made. The minutes note the further pick-up taking place in home values however, the final two sentences are probably the most pertinent. ‘In the Board’s judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.’ These sentences indicate that the tightening bias for interest rates has been removed for the time being.

For the first auction week of 2014 there were 457 total auctions across the combined capital cities. The weighted average auction clearance rate was recorded at 64.3%. The auction clearance rate was slightly higher than the 62.7% recorded during the final auction week of last year however; the number of properties taken to auction was significantly lower than the 1,332 last year. Across Australia’s largest auction market, Melbourne, there were 104 auctions last week down from 531 at the end of 2013. The auction clearance rate was recorded at 74.7% last week which was an increase from 66.2% at the end of 2013. Sydney had 121 auctions last week and an auction clearance rate of 75.0%. The number of auctions was much lower than the 532 auctions at the end of 2013 however; the clearance rate was much higher than the 68.5% at that time. RP Data is currently tracking 900 capital city auctions over the current week.

Capital city auction clearance rates Week ending February 2, 2014

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Tim Lawless

Tim Lawless is the Research Director at CoreLogic Asia Pacific. Tim has been in the Australian housing market industry for more than 20 years with a focus on research.