Westpac senior economist Matthew Hassan said the Melbourne market had been greatly stimulated by the Reserve Bank of Australia’s decision to reduce the official cash rate to a record-low 2.25 per cent.
In a research note, Mr Hassan said Melbourne clearance rates were notably more subdued in 2014, both compared to Sydney and to previous peaks in 2009, 2010 and 2007.
“However, they have surged seven to nine percentage points since February to be within striking distance of those previous peaks,” he said.
“This suggests the RBA’s February rate cut has given a material boost to activity that should be most apparent in the Melbourne market where price growth had been travelling at a more subdued five per cent annual pace compared to double-digit growth in Sydney.”
The main caveat is that conditions appear to be weakening more rapidly in markets not well covered by auction statistics, according to Mr Hassan, who noted that annual price growth has remained flat in Perth and slipped to just 2.5 per cent in Brisbane.
“Auctions account for less than three per cent of transactions in these cities,” he said.
“As such, conditions on a national ‘average’ basis have likely improved by much less than the rise in Sydney and Melbourne clearance rates indicates.”
[Related: Melbourne clearance rate jumps to 77.5pc]