Sydney auctions: rate cuts deliver immediate price boost

Auctioneer Chris Scerri said rate cuts gave buyers a confidence boost. Picture: Tim Hunter.

Interest rate cuts have triggered big spending from home buyers at Sydney auctions, with a rundown cottage among the most notable sales, selling for $700,000 over the vendor’s expectations.

Substantial sales occurred just days after more than 50 lenders announced they would be passing on the Reserve Bank’s Tuesday cash rate cut, the second cut in four months.

Experts noted that interest rate cuts had been expected to drive bigger spending in the housing market, but the recent market rally was bigger than anticipated.

Preliminary indicators showed about 73 per cent of auctions were a success last week, up from about 65 per cent the week prior to the cut and the second strongest week of activity so far this year.

A dated weatherboard cottage in Ryde was one of the most sought after properties, selling under the hammer for $2.3 million – markedly higher than the vendor’s $1.6 million reserve.

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This Ryde house sold for $700,000 over reserve.

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Auctioneer Chris Scerri, who called the auction on behalf of Belle Property agent Alex Macri, said the rate cut was a factor in the higher than expected price.

He noted that the main impact of the cuts was a “boost in confidence” that encouraged bidders to offer higher amounts than expected. There were 15 registered bidders.

The vendors of a three-bedroom house in Lane Cove also got a much higher price than expected. They had set a $2.75 million reserve for their house on Sutherland Ave, which was smashed by $50,000 on the first bid.

The home ended up selling for $3,215,000 – $465,000 over reserve.

Auctioneer Edward Riley, who called the sale on behalf of agent Ella Elias, said there was a sense of urgency from buyers at the auction.

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57 Sutherland St, Lane Cove sold for $465,000 over expectations.

“With interest rates cut again (last) week, we’re starting to see FOMO creep back into the market. Buyers are increasingly concerned that if they don’t act now, they’ll miss out as the market gains momentum.”

In the eastern suburbs, a modest Tamarama unit sold for $2.2 million after a whopping 25 bidders registered for the auction.

For some perspective, the average auction late last year had about two bidders.

Selling agent Angus Gorrie of Ray White Eastern Beaches noted that the property “needed some work”.

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Auctioneer Edward Riley also noted improved bidding after the rate cut. Picture: Tim Hunter.

It comes as polling from Finder.com.au showed there was growing confidence in the market: 36 per cent of Aussies surveyed said they believed it was currently a good time to buy.

This was a notable jump from the 25 per cent who felt this way in 2023, when rates were still climbing.

Baby Boomers and Millennials were feeling particularly confident with just under half indicating they thought it was a good time to buy.

ABS loan figures told a similar story: the number of owner occupier loans issued this year was about 4.1 per cent higher than last year, with the average loan size growing by 8.3 per cent.

An auction in Tamarama attracted 25 bidders. Picture: Ray White.

Finder money expert Richard Whitten said buyer demand could intensify as borrowing costs fall.

“Lower repayments will be felt by June and buyer demand is heating up,” he said. “The forecast to cut the cash rate two more times by Christmas will improve sentiment even more.

“The latest cash rate cut is expected to bolster consumer confidence further in the housing sector … the reduced cost makes real estate a more attractive asset class.”

Mr Whitten said increased demand would likely push up prices this year.

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