Recently the International Monetary Fund (IMF) upgraded its growth forecasts for the Australian economy, stating “this is because of strong commodity exports, a flexible exchange rate, a healthy banking sector, and a timely and significant macro policy response”. The IMF expects Australia’s GDP to contract by a modest 0.5 per cent in 2009, before growing 1.5 per cent in 2010. The IMF has also suggested that Australian interest rates should remain low for some time considering the “fragile state of the global economy”.
The rosier outlook for economic conditions comes as other key market indicators are also showing an improvement. The average level of vendor discounting (the difference between the initial listing price of a property and the ultimate selling price) has been improving with most cities now averaging a discount level around 6% of the original asking price (7% mid last year) and the average time it takes to sell a property is now generally around 30 to 45 days.
Additionally, the recovery in the auction market has certainly withstood the test of time, with every capital city market showing a substantial improvement in clearance rates over the last two months. The two largest auction markets, Melbourne and Sydney, have averaged clearance rates of 79% and 73% respectively over the last two months. Compared to the same period last year these markets were averaging clearances of just 50% and 43%.