CoreLogic’s daily index reported that the quarterly dwelling value growth across both Sydney (-0.4%) and Melbourne (-0.1%) has turned negative.
While the total listings across Australia fell by 11.0%, the total number of homes for sale in Sydney and Melbourne rose by 10% and 5% respectively.
Compared to last year's statistics, the auction values in both markets have also surged. The weekend before Easter saw the busiest auction activity of the year. Both Sydney (1,490) and Melbourne (1,795) markets’ final clearance rates fell to their lowest levels of the year.
Meanwhile, the Easter weekend was also the busiest on record. 483 homes across Sydney went under the hammer.
With the upcoming federal election and the looming shadow of the interest rate hike, sellers consider this to be the best time to sell their homes.
Sellers are well aware of the rate hike cycle so they want to sell their properties before the rates start going up. While the buyers expect the prices to go lower, sellers want to stay one step ahead and sell their properties before it happens.
Sellers believe this is probably as good as it can get and so they are racing to make the most of the current strong prices before the market dampens any further.
People want to cash on this opportunity while the conditions of the market are still good.
As Sydney and Melbourne are the most expensive capital cities in Australia, they will be more sensitive to interest rate hikes and face sharp price falls. The prices are likely to fall by 5 per cent to 10 per cent depending on the interest rate hikes.
Louise Christopher, the Research Managing Director of SQM; Nicola Powell, Chief of Research and Economics at Domain, and Gareth Aird, Head of Australian economics at CBA all agree and quote the same reasons.
The vendors are wise enough to sell while the going is still good to get better values for their homes. If this continues, panic selling will engulf the Australian market.
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