The property markets of Sydney and Melbourne are exhibiting signs of slowing down which affected auction clearance rates that dropped significantly over the last week.
According to The Guardian, Sydney's auction clearance rates dropped to 65.1 percent which is the lowest it has ever been in the last three years. There are only 530 out of 874 properties listed that are considered selling. In Melbourne, the same thing is happening with only 73 percent of the expected sales materializing or 957 of 1,233 listed properties are being sold.
Westpac has decided to increase its interest rates by 0.2 percent which is the first time it has done it in three years. This move has caused the market to be nervous. Just last week, the Reserve Bank of Australia announced that they are noticing signs that the housing markets in Sydney and Melbourne are slowing down in terms of price growth and clearance rates have fallen.
AMP Capital chief economist Shane Oliver said that in 2016 there will be a noticeable decline in the growth of Sydney and Melbourne. According to Oliver, the prices of properties are expected to drop from 5 percent up to 10 percent in 2017 without experiencing sudden rise in interest rates or recession. He added, "This slowdown is likely to be concentrated in Sydney and Melbourne, which are likely to see price growth slow to around 5 percent over the year ahead."
Meanwhile, in a report by Domain.com, property sellers are advised to face the hard truth about the new market rates of homes after auction clearance rates declined significantly over the weekend. It was still in the 90 percent in May and went down to 70 percent early last week. A senior economist from Domain Group Dr. Andrew Wilson said that the market has finally caught up with sellers and are now on the side of buyers.