Despite a large number of auctions over the weekend, clearance rates around the capital cities managed a small bounce back above 70 per cent.
With the spring selling season in full swing, 2,820 auctions took place last week, with almost 1,200 each in Sydney and Melbourne dominating the figures.
The rise in auctions reflects a spring surge in the number of Sydney homes listed for sale, with plenty of homes on the market in Melbourne as well.
The national average clearance rate was 71.3 per cent, up from 69.9 per cent the previous week, according to preliminary figures from CoreLogic RP Data.
Sydney (74.2 per cent) and Melbourne (73.3 per cent) continued to lead the national market, with Adelaide just under 70 per cent and Brisbane just under 60 per cent.
About half the 58 homes auctioned in Canberra sold, while few homes were up for auction in Perth and Tasmania with well under half reported as selling at auction.
Auction clearance rates in Sydney were consistently well above 80 per cent for much of the year, pulling the national rate to a peak around 80 per cent.
However, despite the auction clearance rate falling from earlier highs, home price growth remains fairly robust.
CoreLogic RP Data’s index shows Melbourne recording a weekly price rise of 0.7 per cent, monthly gain of 2 per cent and annual growth of 14.3 per cent.
On these figures, it is closing in on Sydney, where prices have stalled over the past month and the annual growth rate has slipped to 17.1 per cent.
Both cities remain light years ahead of any other market, with Brisbane posting modest growth and other capital cities showing flat or falling prices.
Mortgage arrears ‘as good as it gets’
At the same time as some steam appears to be coming out of bubbling property markets as more properties are listed for sale, a leading credit rating agency is warning that the level of mortgage arrears is likely to rise from current levels which are near record lows.
Fitch Ratings said the percentage of mortgages where borrowers are more than 30 days behind in repayments fell by 5 basis points to 1.12 per cent in the June quarter.
The ratings agency noted that arrears have stayed at low levels of between 1-1.2 per cent since late 2013, as the Reserve Bank cut interest rates.
However, Fitch warned that, with the cash rate at a record low 2 per cent, there is little prospect for further improvement.
“Fitch believes there is little capacity for significant improvement in delinquencies, given current the low interest rates, strong housing market, and stable unemployment rate,” the agency noted in the report.
“We believe arrears may increase if unemployment rises in line with expectations at end-2015.
“Household expenses are expected to have a crucial role in borrowers’ serviceability, although CPI rose by just 1.5 per cent year-on-year in June 2015. Fitch believes that if the cost of living increases and outpaces income growth, mortgage performance will be negatively affected.”
Some pressures are already showing for, mainly self-employed, low-doc borrowers, where 30-day-plus arrears rose 28 basis points to 5.72 per cent.
So-called non-conforming borrowers, a small group that do not meet regular lending standards but were still issued home loans, are recording a delinquency rate of 7.96 per cent.
However, the continued strength in home prices is so far insulating banks from taking significant losses on mortgage defaults.
“The annualised loss rate continued to improve marginally year-on-year, as the national house-price gain of 9.8 per cent year-on-year helped to clear long-dated arrears, and limit losses and claims to lenders’ mortgage insurance providers,” the report added.