Home buyers appear to have shrugged off the latest interest rate rise with weekend auction clearances up in all state capitals, except Adelaide.
The show of strength in the property market comes as the Reserve Bank is expected to announce today that inflation is going to remain outside its target band for at least the next 12 months.
Economists believe the RBA's forecasts will be raised to show that core inflation could be as high as 3.25 per cent by June next year and the odds of an interest rate rise in March are firming with the financial markets tipping a 30 per cent chance of a "back-to-back hike".
The Melbourne, Sydney and Brisbane markets defied doomsayers by recording increases over the previous week. Brisbane led the way with a rise of almost 11 per cent, followed by an increase of almost 5 per cent in Sydney and 2 per cent in Melbourne.
While analysts cautioned yesterday that one week's auction clearances were insufficient to gauge a market trend, they said the weekend result was nevertheless encouraging.
"There was never going to be blood in the streets, but realistically auctions could have been down, especially in mortgage-belt areas," said Melbourne loans consultant Noel Atkinson of Atlas Property Group.
Rates rises may feed through
He said it would be several weeks before the real picture emerged, but feedback from mortgage brokers was that they expected February to be at least asbusy as January and better than December.
Only Adelaide, the rising star of Australian property markets with a 22 per cent increase in home prices over the past year, suffered a fall in clearances.
In a week that saw the announcement of the closure of the city's Mitsubishi car plant, buyers were playing it cautious, with clearance rates down from 62.7per cent the previous Saturday to 56.4 per cent.
Market-watchers are keeping a close eye on Adelaide in the wake of the Mitsubishi plant closure.
However, LJ Hooker Corporate auctioneer Paul Henry said yesterday he remained optimistic that Mitsubishi's demise would have a minimal effect.
"When Mitsubishi's engine plant closed in 2004, it made no difference to the market," he said.
The first two weeks of February are historically a quiet period for residential auctions, with the market still recovering from the holiday lull.
In Melbourne, where about 30,000 auctions are held each year, only 250 properties were scheduled for sale at the weekend with an impressive 78 per cent clearance rate, a 2 per cent improvement on the previous weekend.
Agents expect to get a better picture next weekend when 650 homes go under the hammer, and the weekend after that, with about 1100 homes to be auctioned.
According to Australian Property Monitors, Sydney had 113 auctions on Saturday, recording 68 sales totalling $45.4 million. A year ago, Sydney had 97 auctions totalling $28.9 million. Saturday's 57.6 per cent clearance rate was up from 52.8 per cent the previous weekend.
The most expensive property was a four-bedroom house at 144 Young Street, Annandale, that sold for $1.5 million. The cheapest was a two-bedroom unit at 39 Yerrick Road, Lakemba, that sold for $153,500.
Brisbane had a 48.7 per cent clearance rate for its 37 auctions.
Total sales were $12.1 million, identical to a year ago when 39 homes were auctioned
