After recording a dismal 71.6 per cent clearance rate on May 7, the Sydney auction market bounced back big last Saturday with a clearance rate of 80.3 per cent—its highest results since the 83.1 per cent recorded on July 18 last year at the peak of the house prices boom. It was also significantly above 2016's running average of 73.2 per cent.

The lower north shore was the star performer last weekend with a clearance rate of 93.1 per cent. It was followed by Canterbury Bankstown, upper north shore, and inner west. The most expensive property sold was a three-bedroom home in Hunters Hill priced at $7,025,000. The cheapest is a two-bedroom unit in Liverpool sold for $370,000.

Sydney recorded a median auction price of $1,120,000, 2.23 per cent higher than the same weekend last year. A total of $305.1 million was reported sold at auction.

The sharp increase follows the cut in mortgage rates announced by most lenders over the past week. It also confirms that investors are re-entering the market ahead of possible changes to negative gearing. According to the latest ABS lending finance data, loans for residential investors increased by 30 per cent in March as investors secured $5.5 billion in lending—its highest monthly total since September last year. This investor market rush predates the cut in official interest rates to 1.75 per cent, which is certain to increase activity levels further.

Unfortunately, Saturday's auction clearance rate could signal a revival of price growth—surely bad news for first home buyers.