According to CoreLogic, Sydney dwelling values increased 1.6% in one month during August 2019 and in Melbourne by 1.4%. Auction clearance rates for the combined capital cities (Australia) are almost back to the levels of the last boom in mid 2017.
While this is a good sign for increased sales volumes and more conveyancing, a significant factor in the current increase in dwelling values is reduced supply. According to CoreLogic, the number of properties coming onto the market is 17% lower than last year. Vendors have been holding back putting their homes on the market during declining values.
Sales volumes are still at historic low levels but rising – see graph below. The latest price rises in Sydney and Melbourne will keep the trend moving upwards.
The Reserve Bank is taking advantage of low inflation to test the limits of low interest rates in order to give the economy a boost. As usual, the value of assets adjust quickly to financial manipulations. It will yet to be seen if the interest rate manipulation has any effect on the ‘real’ economy.