Auction numbers in Sydney continue to rise to record levels as sellers flood the market to take advantage of still strong market conditions before years end.

This weekend Sydney is scheduled to host 878 auctions which are well ahead of last weekend’s 753 listings and the 739 auctions conducted over the same weekend last year.

October has been a record month for auction activity for that month in Sydney and follows record results for August and September with November clearly set to continue the record-breaking trend of the spring selling season so far.

High auction numbers however may be impacting on clearance rates as supply catches up with demand. The Sydney market fell again last weekend recording the lowest clearance rate for three months. The 78.9 percent result - although still strong, was nonetheless the second time in three weekends the clearance rate has fallen below the boom-time benchmark of 80 percent. 

The Sydney market reported 9 consecutive weekend clearance rates above 80 percent from the start of August to the beginning of October. The underlying trend of the past month however continues to weaken with the four-weekend average clearance rate now standing at 80.6 percent compared to 82.9 percent over the previous four-weekend period.

Sellers however remain are clearly energised by still-high clearance rates, low interest rates, Australia’s best performing local economy and unsurprisingly still strong prices growth.

The inner west will again clearly host the most number of auctions this weekend with 145 followed by the upper north shore with 129, the city and east 120, the south 115, the lower north 88, the northern beaches 64, Canterbury Bankstown 56 and the west with 54 auctions scheduled.

The most popular suburbs for auctions this weekend in Sydney are Strathfield in the inner west and Manly on the northern beaches each with 12 auctions listed. These are followed by Randwick in the city and east and Mosman on the lower north shore each with 11 and Ashfield in the inner west and Blacktown in the west each with 9 auctions scheduled this weekend.

Recent strong Sydney house price growth is being generated by mid to upper price range changeover buyers with the upper north shore at 9.3 percent, the inner west at 8.8 percent, the city and east at 5.8 percent, the lower north at 5.7 percent and the northern beaches at 5.2 percent reporting the best regional price growth in Sydney over the September quarter.

Low interest rates have been a key driver of the strong Sydney housing market over the past two years with the Reserve Bank meeting for its regular Melbourne Cup Day meeting next Tuesday to determine monthly official interest rate settings. Rates have at the current 60 year low settings of 2.5 percent for 14 consecutive months since August last year - the longest steady sequence since 2002.

Although rates are set to remain at the current level over the remainder of 2014, increased concerns about the current performance of the national economy particular the state of the jobs market are now raising the prospect of a rate cut early in 2015. 

Dr Andrew Wilson is senior economist for the Domain Group

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