Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Monday, 16 March 2015

6 year high for auction clearances

6 year high

Corelogic-RP Data reported that capital city auction clearance rates continued to increase to a 6 year high at the weekend.

Sydney clearly leads the way with a massive 85.1 percent clearance rate, reflective of the huge demand for property in the New South Wales capital.

Domain Group also reported an 84 percent clearance rate for Sydney from a smaller sample. 

Auctions are less popular as a means of sale outside Sydney and Melbourne.

Property mining town "hotspots" suffer

This is very much a capital city story, however.

While Sydney may be enjoying boom-time auction clearances, as I warned here, here and here - as well as countless other places - many coal mining regions are seeing demand collapse, and not only for the commodity itself.

News reports that half a dozen mines have been closed in the Bowen Basin, sending shockwaves through Central Queensland with worse to follow.

Many hundreds of jobs were axed in 2014 with further redundancies and mine closures to come.

The worst hit areas from the coal price collapse will include Bowen, Emerald, Saraji, Dysart, Blackwater, Moranbah...and so on.

Local government has blamed the "high value of the dollar" which seems unusual given that the dollar has fallen from 110 cents to nearly 75 cents to the greenback.

The only thing that can be "blamed", if anything, is that the region is massively leveraged against a commodity price where supply has unsurprisingly soared, while demand has simultaneously taken a nosedive.

As I noted here, this was more or less inevitable, with so many of Australia's producers sitting at the perilous end of the production cost curve.

It's another good reason to invest in property markets with diversified industries.