Welcome to another week of Today In Property, where some things are looking sunnier than others.
One big ray of sunshine is highlighting still-strengthening auction clearance results, with a national preliminary clearance rate of 68.3 per cent and results above 70 per cent for a second week in a row in Sydney and Melbourne. One thing that's different was the number of homes under the hammer, which was only slightly down on same weekend last year's number (1100 versus 1124 across the country).
This suggests that stronger-than-expected auction results since June are not just because stocks are low. The AFR has quoted homeloanexperts.com.au and CoreLogic today saying that a bigger factor is the reduction of loan serviceability buffers.
Speaking of CoreLogic, its data unveiled a surprise for anyone watching the apartment sector. Its price growth data for Sydney and Melbourne has shown apartment prices in high-demand suburbs of Sydney and Melbourne have increased faster than the cost of houses.
"Concerns about construction quality and flammable cladding could weigh down buyer confidence, which might exacerbate the dampening effect of high supply. Anecdotally, these concerns seem less relevant across the medium-to-low density apartment sector, as well as unit stock with a heavier bias towards owner-occupiers, where supply levels are generally low.”
Those buyers are less likely to be owners of apartments in Mascot Towers, who found out over the weekend that their damages bill is going to be upwards of $76,000 per unit. That's a total $10 million bill to fix the defects plaguing the development.
Low rates aren't great for everyone
Morgan Stanley has written down its forecast on three of the four major banks, based on the expectation that low rates mean they will earn less from the home loans that constitute the single most lucrative element of their business mix.
This will make shareholders nervous, but won't upset too many customers if this article from the ABC is anything to go by. It suggests that after the most recent round of EBAs across Australia, we'll be looking at entrenched wage stagnation across the board for years. Australia's major department stores are feeling this situation keenly at the moment.
SMH economics editor, Ross Gittins has covered well-worn ground in his column today, suggesting that low interest rates are not going to be nearly as useful to putting more money in people's pockets as government stimulus. But beyond the recently-secured tax changes, the Morrison government appears to be taking a wait-and-see approach.