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News: Adelaide surges as Sydney struggles

Mon, 03 Sep 07

The start of the spring selling season did little to revive the sluggish Sydney housing market, but in Adelaide, house prices are surging, reports Australia News (http://www.news.com.au)...

The most recent auction clearance rate was 65 per cent, well above the 55.9per cent rate this time last year but down 0.6 per cent on the previous week.

Australian Property Monitors research analyst Michael McNamara said improving market conditions gave an impression that prices should be moving, but results remained sluggish.

Historically, the spring selling season is boosted by people hoping to buy a home by the October long weekend. But Mr McNamara said other factors were in play this year, including the APEC conference, the looming federal election and the prospect of another interest rate rise.

According to the Real Estate Institute of Victoria, Melbourne's Saturday auction clearance rate was above 80 per cent, reflecting booming sales in inner and middle suburbs. However, houses in outer Melbourne, which are traditionally not sold by auction, remain difficult to sell.

Heat in Adelaide market

A hot real estate market in South Australia is making auctions increasingly appealing. Traditionally, a vast majority of homes sold in South Australia are sold by negotiation - or private treaty - rather than at auction.

Figures from the Real Estate Institute of South Australia show that of the 23,000 houses sold over the past 12 months, about 1200 have gone under the hammer. That's less than 5 per cent of the total market, and predominantly in the eastern suburbs.

However, real estate agents say an auction process is the best way to sell for many more people because of strong current demand and a tight housing market.

They say several houses selling at auction are fetching tens of thousands of dollars more than they - and the owners - expected because there are too many people bidding for too few houses.

A shortage of good property

L.J. Hooker Unley principal Peter Economou said there had been many examples in recent weeks where homes had sold for at least $100,000 more than their valuation.

"I'm not talking in the $1 million bracket - I'm talking in the $400,000 to $600,000 bracket. There's definitely a shortage of good property on the market, and that creates more competition,'' he said.

"Any vendor I think would be well advised, with the protection of their reserve price, to go to auction and make sure they at least have a toe in the water.

"If you are a seller, go to auction. Under the present conditions you owe it to yourself to test the water.''

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