By the end of last week all four of Australia’s major banks had raised or were going to raise rates on housing finance. They were joined by – what was once – Australia’s largest investment bank.
The rate rises are as follows:
| Bank | Rate Increase |
|---|---|
| ANZ | 0.18% |
| CBA | 0.15% |
| NAB | 0.17% |
| Westpac | 0.20% |
| Macquarie | 0.20% |
The media reported that as a result of the above auction clearance rates in Sydney had plummeted to 64.4%. So, fear and panic all around then…except, no.
When you analyse the numbers you realise that the real big fall was north-west Sydney. Clearance rates had plummeted to around 27.1%. The clearance rate numbers by region are as follows:
| Sydney Region | Auction Clearance Rate |
|---|---|
| Inner West | 81.0% |
| Lower North Shore | 72.5% |
| South | 48.6% |
| City & East | 81.3% |
| Upper North Shore | 62.3% |
| South West | 65.4% |
| Central Coast | 40.0% |
| Northern Beaches | 64.7% |
| Canterbury-Bankstown | 60.0% |
| North West | 27.1% |
| West | 52.7% |
Given the massive number of land releases and developments in that area, this is not a surprising outcome – take a drive to Riverstone, Schofields and the surrounding areas and you will see urban development as far as the eye can see.
If clearance rates were purely driven by interest rates (and the banks’ willingness to raise rates), why haven’t the city & east and the inner west fallen by a similar amount?
The answer is supply. Those areas are never going to be able to provide the same level of housing expansion as the open/rural spaces of the outer north-west regions of Sydney.
Which brings me to an anomaly in the numbers above. The south-west of Sydney also has massive supply coming online and yet their clearance rates are holding up surprisingly well.
It will be worth keeping an eye on that region.
As Sydney cools, other markets are starting to heat up particularly Brisbane. Keep your eye on that market if you’re an investor
As far as interest rates go, remember that the banks raise rates by applying the rises to the banks standard variable rates for owner occupied and investment loans – so everything.
The reality is somewhat different. You can choose to go to the above lenders if you so desire. First, check what this week’s offers are. We have 20 lenders to choose from and that list is growing. It is fair to say – thanks to a competitive market – we (along with other brokers) tend to get a special deal every week or so.