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 "The property market tide is in ebb. The introduction of new taxes for NSW investors has added additional pressure to an already slowing Sydney property market." - Mark |
| Crash fear amid auction slump |
| By Peter Shadbolt |
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May 03, 2004 THE worst weekend for house auctions in more than a decade has brought Sydney, once at the vanguard of the surging property boom, to the brink of collapse. Nearly two-thirds of the properties put up for auction failed to find buyers, with a dismal adjusted clearance rate of just 35.7 per cent. If the slump signals the start of a crash, the Howard Government – whose economic success has been underpinned by the housing boom – will come under intense pressure ahead of the federal election. Peter Costello signalled that the Government saw no justification for a rise in interest rates at tomorrow's monthly Reserve Bank board meeting. The Treasurer said last week's inflation figure of 2per cent was "bang on the lower band" of the 2-3 per cent target for inflation agreed by the Government and the RBA. Low interest rates have fuelled the property boom, and ministers will be anxious to avoid rate rises in the lead-up to the election, to ensure the Government retains its perceived advantage over Labor on the issue of economic management. In Sydney, out of 111 properties to go under the hammer over the weekend, 45 were sold and 15 withdrawn before auction, according to the Home Price Guide. The weekend clearance rate average for the past four weeks was 39.2per cent. While the figure was dragged down by the normally sluggish Easter weekend, it hovered around the doomsday 40 per cent mark, which would signal a crash. "Anything under 40 per cent and things are looking pretty scary," said Louis Christopher, research director at Australian Property Monitors. Melbourne property prices have already been savaged. The March quarter was the market's flattest since 1996 and median metropolitan house prices tumbled for the first time in three years. Median prices in Clifton Hill fell a staggering $92,000, from $580,000 in the December quarter to $488,000. While weekend auction clearance rates in Melbourne were steadier at 54 per cent, the volatile Sydney market has always been a strong indicator of the direction of property prices. "If clearance rates continue at these levels, we're in crash territory," Mr Christopher said. "We haven't seen figures like this since the last recession, and then we saw property prices falling." Sydney recorded its lowest monthly auction clearance rate for 13 years in March, with more than half the houses put up for auction failing to find buyers. The March adjusted clearance rate hit 45.5per cent. Agent Martine Wachten heim, at the inspection of a one-bedroom terrace in Sydney's Darlington, was putting a brave face on the prospect of a crash. "I don't think the market has crashed – it just means we have to work harder to sell a property. The market is more realistic now," she said. Reference: The Australian 
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