Auction clearance rates in Melbourne and Sydney last weekend were 80% and 62% respectively despite the Spring racing carnival and Caulfield Cup in Melbourne.
The Housing Industry Association’s affordability index dropped 3.3% (from 153 to 147.9 index points) in the September 2009 quarter from a mere 0.4% drop in the June 2009 quarter. According to a senior HIA economist, the outlook for housing affordability is not good as interest rates are expected to increase over the next 6 months, whilst the first-home owner’s grant will be faced out completely by 31 December 2009. In addition, the process to increase housing supply is still facing a lot of barriers.
Over the last year and a half, the RBA has reduced interest rates by 425 basis points to a 49-year low prior to the recent 25 basis point increase. Coupled with the Federal government’s boost to the First Home Owner’s Grant and significant growth in immigration, the property market has been very strongly supported by these factors.
Victoria recorded the biggest drop of 9.3%, followed by 5.5% in New South Wales, 5.1% in Tasmania and 3.9% in Western Australia. On the other hand, ACT and South Australia’s affordability improved by 3.8% and 2.2% respectively.