Property market to remain strong despite reduction in first home owners grant

Last weekend’s auction clearance rates remained strong with first-time buyers rushing to take advantage of the last week of the first home owners grant, despite a drop in volume numbers due to the AFL Grand Final.

But despite the drop in value of the grants, Australian Property Monitors senior economist Matthew Bell says the recent growth in the market will not be deterred.

“If you look at last weekend’s rates, before this most recent one, it was very strong in terms of numbers. In Sydney we had the most amount of houses up for auction we’ve ever had, and we had great clearance rates, so although there is some movement of getting in for the last bit of the grants the market is still holding up well.”

But Bell says despite the strength of the market, the disappearance of the first home owners grant next week and again after 31 December will have an impact in the market.

“The general view is that there is going to be a drop off in demand due to the grant expiring, but I don’t think that’s going to transfer to a big drop in prices across the board. Investors are coming back into the market, and I think that will fill some of the gap in terms of demand.”

“I think we will see some flattening in prices, but I don’t think we’ll see any of the catastrophic drops that people used to predict when people talked about the grants when they first came in.”

In Melbourne, auction results were solid despite only 135 properties reported for sale due to the Grand Final. Of those 113 were sold resulting in a clearance rate of 86%.

“The auction market picks up again next weekend with 500 homes going under the hammer and nearly 700 the weekend after,” Real Estate Institute of Victoria chief executive Enzo Raimondo said in a statement.

In Sydney, 470 properties were put up for auction with 342 sold and 37 withdrawn resulting in a 67% clearance rate. Total sales reached $253 million.

In Brisbane, 30 properties went up for auction with a clearance rate of 67%, and total sales reaching $10 million. In Adelaide, only five properties went up for the auction, resulting in a clearance rate of 60% and sales worth $1.2 million.