The number of property auctions in Australia is expected to surge in the coming two weeks, as sellers aim to benefit from the Reserve Bank of Australia (RBA)’s recent interest rate cut. The RBA reduced the official cash rate by 25 basis points, easing the financial burden on current mortgage holders and enhancing the borrowing capacity of potential buyers, which could lead to an increase in property prices.
In anticipation of a price hike, many sellers are scheduling auctions, particularly in major markets like Sydney and Melbourne. This weekend alone, approximately 2,395 homes are set to go under the hammer, reflecting a substantial rise of 34.2% compared to the previous week and a 5.8% increase from the same time last year, when rates were higher. Sydney is seeing a notable 44.7% jump in auction numbers, with 803 properties up for auction, while Melbourne expects over 1,000 auctions for the first time in six weeks, totalling 1,152 listings.
According to property data firm Cotality, the number of auctions is projected to climb further, reaching around 2,700 by next weekend. The recent rate reduction to 3.85% effectively boosts the average Australian’s borrowing power by approximately $12,000, increasing that of an average couple by $23,000. Economists predict additional cuts through 2026, which could give someone on the average wage up to an extra $50,000 in borrowing power by March.
However, experts caution that while buyers may be able to borrow more, it does not guarantee they will enter the property market any quicker. With increased borrowing capability, sellers may raise their asking prices, often leaving buyers at a disadvantage. Canstar’s data insights director, Sally Tindall, emphasised that while this cut provides a boost, the ultimate benefactor of rising borrowing amounts is typically the seller.
While the recent changes instil optimism in the property market, concerns linger that an influx of demand without a corresponding increase in listings could lead to escalating prices. The overall sentiment reflects a hopeful shift in the housing landscape, yet it underscores the need for a balanced influx of properties to maintain price stability.