RBA Rate Cut Fuels Surge in Home Buyer Demand

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The latest data from property analytics firm Cotality (formerly CoreLogic) highlights a strong preliminary auction clearance rate of 71.3% across Australian capital cities, marking the second highest early result this year. This strong performance follows last week's 0.25% interest rate reduction by the RBA, which seems to have reinvigorated buyer interest, even as auction volumes surged by 40.8% compared to the previous week, reaching 2,512 auctions.

Historical trends were observed, with parallels drawn to the February rate cut where the preliminary clearance rate increased to 72.1%, the peak for the year, before later stabilizing at 64.2% by the end of April, as enthusiasm tempered gradually.

Currently, Melbourne's auction clearance rate stands robustly at 73.7%. This marks the fourth consecutive week where the preliminary clearance rate remained above 70%. Sydney has also shown momentum, with a preliminary clearance rate climbing to 72.2%, a significant improvement from 65.2% the prior week. This represents Sydney's first 70%-plus clearance rate in ten weeks.

The correlation between auction clearance rates and property prices is underscored by Cotality, with the latest rate cut expected to bolster market dynamics and anticipate an upward trend in home prices.

Looking ahead, the futures market suggests additional monetary easing, forecasting up to three more 0.25% interest rate cuts by the RBA within the current calendar year. This could further stimulate the real estate market, influencing both buyer confidence and property values as the year progresses.

Published:Monday, 26th May 2025
Source: Paige Estritori

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