Property buyers hoping to cash in to the anticipated boom in Sydney dominated auction sales in the city, a new report showed.
According to RP Data, more than 2,000 properties went under the hammer in October, the highest number for the past four years. Three quarters (70%) of those properties sold amounted to $1.13 billion.
"In terms of numbers of properties offered for auction and total value of sales achieved, October 2007 was the strongest month since November 2003," said John Wakefield, research director with RP Data.
Wakefield noted that in the current heated market, vendors have been selling their properties with expectations of higher prices and buyers have, to date, been willing to meet those expectations. As a result of this strong demand, the median price for a freestanding house sold at auction in Sydney has climbed by 6% to $793,000 over the last year ending October according to RP Data.
However, there are signs that the prospect of higher interest rates is starting to weigh on investors' confidence. Clearance rate dropped by 2% points from the September level of 72% and is 4% points down from the high of 74% during August 2007.
"The recent interest rate hike may cause buyers to pull back from overbidding and become more cautious to go over the reserve price. However, I don't think the number of auctions or bidders will decline."
Wakefield pointed out that while property prices may not start to fall following the November interest rate increase, another rise may see property prices heading in the opposite direction.