Our Market - September 2024
As we move through spring, the real estate market has experienced notable changes in just a month. We are currently witnessing a shift in the dynamics of demand and supply. While more properties are entering the market with the spring selling season, the number of active buyers has decreased. This decrease is largely attributed to ongoing inflation uncertainty and persistently high interest rates. This shift began to emerge towards the end of August and has continued through September. Below is a snapshot of our local market performance during September, with comparative statistics from the same month last year:
Sold at Auction = 58 (62)
Sold Prior = 51 (52)
Passed in at Auction = 20 (23)
Withdrawn from Auction = 36 (10)
Auction Clearance Rate = 66% (77%)
Sold by Private Treaty = 36 (58)
Postponed Sales = 5
One of the best indicators of the change in local market conditions has been the decline in auction clearance rates. Until September, these rates had consistently hovered around 80%, but a noticeable drop occurred this month, see below our local markets auction clearance rates over the last 5 months.
1. May: 77%
2. June: 78%
3. July: 81%
4. August: 77%
5. September: 66%
While we are seeing an increase in properties being withdrawn from auction or passing in, certain segments remain resilient. A-grade properties continue to attract strong buyer interest and command impressive sale prices, underscoring that quality homes are still highly sought after. The changing market conditions have resulted in a patchy landscape. Properties aimed at entry-level buyers and investors, particularly one-bedroom apartments, are experiencing limited interest. In contrast, quality two, three bedroom, and larger-family homes still garner healthy attention. However, potential buyers are becoming increasingly picky; and any negative aspects of these properties can impede sales as buyers recognise the softening market and adjust their urgency accordingly.
As we neared the end of September, we received some encouraging economic news: the annual inflation rate for August showed a significant drop from the previous month. The Consumer Price Index (CPI) rose by 2.7% over the 12 months leading to August, down from a 3.5% increase recorded in July.
Monthly Consumer Price Index Indicator, August 2024 | Australian Bureau of Statistics (abs.gov.au)
This reduction in inflation could lead the Reserve Bank of Australia (RBA) to reconsider interest rates. RBA will be closely watching the inflation figures to be released at the end of September. If this downward trend continues, the RBA may contemplate lowering interest rates during their upcoming meeting on Melbourne Cup Day, which should have a positive impact on the market.
Should interest rates decline, we anticipate a boost in consumer confidence, potentially reversing some of the current market softening. This presents a unique opportunity for buyers to take advantage of the current conditions while they last, which may yield favourable results in the near future.
In conclusion, while the market is transforming, it is crucial to remain informed and strategic. The interplay of inflation, interest rates, and the broader economy will shape the future of the real estate landscape. Buyers who stay proactive may find themselves in a prime position to make advantageous decisions. Only time will reveal how these factors will unfold, but being alert to opportunities now could lead to significant benefits. If you would like to discuss the current market or your next real estate move in more detail, please don’t hesitate to call, we are always happy to help.