To highlight the effect of this ongoing series of rate cuts, over the past six months auction clearance rates in Sydney and Melbourne have dramatically accelerated. A remarkable 86.4% clearance rate was achieved in Sydney during the third weekend in August – the highest level since June 2015 according to CoreLogic RP Data. However this may also have been driven by the low auction numbers of just 492 properties compared to 723 on the same weekend last year.
To counter those who believe that keeping interest rates exceptionally low contributes to reduced housing affordability, the RBA has played down the impact of the low rates on house prices. It mentioned that house prices have been increasing “only moderately over the course of the year” and that “growth in lending for housing purposes has slowed a little this year”. It stated that “all this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished.” There is also speculation that the extensive supply of apartments due to hit the market particularly in Sydney, Melbourne and Brisbane could have a weakening effect on house price growth.
