Labor’s resounding victory in the recent election has invigorated Australia’s housing market, with an anticipated interest rate cut looming next week. Following the election, auction clearance rates experienced a notable surge, reaching 70 per cent according to Cotality, a property data analyst previously known as CoreLogic. This marks a significant 10 per cent increase from mid-last month.
As we move forward, experts predict that house prices will outpace wage growth for the remainder of the year. Furthermore, projections suggest that prices will continue to rise into the next year, especially with the Labor government’s initiatives aimed at assisting buyers set to take effect. Last week, capital cities saw 1,784 auctions, marking the busiest week since the period prior to Easter.
In Melbourne, where 830 homes were auctioned, the clearance rate was recorded at 73.2 per cent, a slight decrease from the previous week’s 74.4 per cent. Meanwhile, Sydney’s auction clearance rate stood at 67.7 per cent from 665 auctions, continuing a trend of remaining below the 70 per cent threshold for eight consecutive weeks.
Mortgage holders may find relief soon, as the Reserve Bank of Australia (RBA) is anticipated to set the cash rate next Tuesday. Economists are forecasting a reduction of 25 basis points to the current cash rate of 4.1 per cent, although some analysts speculate there could be a more significant cut, potentially lowering the rate to 3.60 per cent. In February, the RBA implemented its first official rate cut in nearly five years, and forecasts suggest at least three additional reductions are likely this year as underlying inflation has retreated into the bank’s target range for the first time since 2021.
Moreover, the optimistic outlook for the market has been further strengthened by global financial markets reacting positively to renewed discussions between the United States and China concerning tariffs imposed during Donald Trump’s administration. This combination of political and economic factors appears to be driving the housing market’s recovery, signalling a potentially brighter future for prospective buyers.