Improving auction clearance rates in Melbourne suggest house prices will rebound over the next 12 months but leading economist Shane Oliver says any upswing in prices could remain fairly constrained.
On the weekend here in Melbourne, 416 homes went under the hammer at a clearance rate around 70 per cent according to CoreLogic figures.
The figures certainly suggest the worst of the downturn is over, so are prices set to rise over the next year?
AMP chief economist Shane Oliver spoke to News.com about the possibility.
Historically, once clearances move higher than volumes eventually start to pick up again,” he said.
“More property comes to the market and eventually that results in higher prices.”
“The property cycle has turned and prices have probably bottomed, but the debate is about how strong the upswing’s going to be.”
Mr Oliver says there’s a few forces working against a super-strong rebound right away.
“Lending standards are a lot tougher therefore it’s still going to be harder to get a loan,” he told News.com.
“There’s a lot more supply hitting the market than there was in around 2012-2013 when we last saw a big rebound in clearances.”
“So while I think we have probably seen the bottom for the property market and the outlook has improved, I think it’s going to remain fairly constrained over the next 12 months.”
Mr Oliver says he expects it to be a busy spring selling season as sellers come out of the woodwork after waiting for the downturn to end.
“Once we see more supply coming into the auctions, then the clearances will probably come down a bit,” he said.
“It’s hard to believe things are this strong, it’s improved but it’s debatable as to whether the raw clearance figures would suggest.”
“It’s quite likely that when supply picks up coming into the spring and as buyers realise that it’s more difficult than it used to be to get a loan, then I think the clearance rates will probably settle back down again.”