Auction scene signals peak has passed Oct 30 Robert Harley
From the slick auction rooms of Sydney's Double Bay to the first-home buyers of Perth's Marangaroo, the message is the same. Australia's house price frenzy is cooling.
In Sydney and Melbourne, the auction clearance rates have wound back, the fizz has gone and some agents are talking of prices perhaps 10 per cent down on what might have been achieved earlier in the year.
Even in Queensland, perhaps the nation's hottest real estate market, the national director of Ray White Prestige, Shaun Tobin, believes the top of the wave is passing.
Brisbane, he says, reached its peak in June. "The super premium has evaporated . . . the market won't fall out of bed after Christmas but there could be a percentage drop in prices."
But what does that mean? Is this finally the end of the boom or merely another pause in the upward trajectory of prices?
In Sydney and Melbourne, the auction clearance rates always dip at this time of year in response to a surge in the volume of property up for sale. It is simple supply and demand. This year the selling should be even harder. Prices have risen another 10 per cent to 20 per cent over the past 12 months and interest rates are widely expected to rise in the new year.
The drama of an auction has also been curtailed. In Sydney all bidders must be registered. In Melbourne many auctioneers are disclosing the vendor's bids, either in response to the requirements of good practice or the threat of action by the Australian Competition and Consumer Commission.
Yet the dip in auction clearance rates is no greater than last year. On the evidence of the accompanying graph from homepriceguide.com, the dip is perhaps less than in 2001 and 2002. And after both those spring selling seasons, the market firmed through the summer and soared again the following autumn.
Statistics lag the market, but the latest figures are bullish.
The Real Estate Institute of South Australia's median house price numbers for the September quarter, which are the first house price numbers to be released for that period, showed that the median price in South Australia had risen again, to $202,500 and 22 per cent above the level of a year ago.
At the same time, borrowing for residential investment, which is the figure that scares the Reserve Bank most, surged to a new high of $6.81 billion in August.
On Tuesday evening, at the Laing & Simmons auction in Double Bay, 19 properties were due to go under the hammer. Six were sold beforehand, one was withdrawn and the overall clearance rate was about 70 per cent.
Sure, the crowd was thinner and the bidding was slower. But most properties had at least two bidders - they can be identified now - and one property, an investment block of six flats, attracted six registered bidders.
So have prices come off? Perhaps the 10 per cent premium of last June has evaporated, but one $2.25 million home in Double Bay sold for about $500,000 more than it changed hands at a year ago.
However, one vendor, who had bought a Paddington home for $900,000 earlier in the year, and spent another $200,000 on renovation would probably have been disappointed that the expected profit had evaporated.
No one expects the house price appreciation of recent years to continue. But while many economists and financiers have forecast that the so-called bubble must burst, few at the coal face expect to see a widespread downturn in prices.
Sydney real estate veteran and chairman of the Raine & Horne network, Max Raine, told his company's international convention in September house prices would rise 15 per cent over the next 12 months, subject to economic and global conditions remaining the same.
He sees no reason to change the forecast. "The top price brackets, like Sydney's upper north shore and Paddington, might be marking time but scarcity of land underpins the market," he said.
