Market response to the Reserve Bank of Australia’s (RBA) recent rate cut has been slower than anticipated, with clearance rates still tracking below peak levels.
According to CoreLogic, the combined capital city clearance rate fell to 69.6% last week, down slightly from 69.9% the previous week, despite a lower volume of auctions. In Sydney, the clearance rate dropped to 70.7%, with fewer reported results and overall auction volumes down.
While some high-profile sales still attracted strong competition — such as a $5.4 million deceased estate in Sydney’s Inner West selling $900,000 over reserve — broader market sentiment has not seen a substantial lift. Sales agents noted that while February’s 0.25% rate cut had improved buyer turnout, it has not yet translated into higher competition or demand.
According to SQM Research’s Managing Director, Louis Christopher, “We were expecting a little more confidence by this time following the rate cut, and it hasn’t really happened.” He added that further rate cuts may be necessary to stimulate buyer demand, particularly in Sydney and Melbourne, where auction clearance rates remain below peak levels.
In Melbourne, the auction clearance rate came in at 70.5%, down significantly from 1381 auctions the previous week to 496 auctions—largely due to the Labour Day long weekend. Meanwhile, Brisbane, impacted by ex-tropical Cyclone Alfred, saw clearance rates increase slightly to 57.6% despite the weather challenges.
Most economists anticipate two more rate cuts this year, with the next likely as early as May. For now, buyers appear to be holding off, waiting for clearer signals of affordability before re-entering the market.
As the market adjusts to shifting interest rates, it’s crucial for buyers to stay informed about market conditions and opportunities.
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