With ever increasing media attention focused on our national property markets, it's difficult to sort through all the information and statistics bombarding us every day. Whether it be on the TV, in the papers or on the radio, everyone wants to tell us how poorly property is faring. But what's the real story?

Sure, real estate has slowed down to some extent across the board at present. And although the doomsday speculators would like us to believe this is the end of the world as we know it, the truth is there are always peaks and troughs in the property game. It's just the way it works.

So, let's try to make some sense of what the media is telling us on a daily basis right now.

The primary scare tactic over the past couple of weeks has been in regard to supposedly flagging "auction clearance rates".

Melbourne particularly, with its status as the auction capital of Australia, has come under fire from the press. In the Herald-Sun and on the Channel 9 news, recent falling auction clearance rates were reported varyingly with headlines such as, "The End of the Property Boom!" and "Property Prices to Fall – Now is the Time to Bag a Bargain!".

But just how close to reality are these predictions?

Media outlets like to focus on clearance rates as a barometer for how the property market is faring, and how confident buyers and sellers are in the marketplace. And yes, auction clearance rates have been dropping off lately from the record highs some cities were experiencing last year.

But before you start to panic and wonder how you can offload all of the investments in your portfolio, consider this…Just like any other statistic related to property, auction clearance rates need to be examined from a number of different perspectives. And the good news is, when you stop to reflect on just what these figures really mean, the overall picture is not as bleak as some would have us believe.

Firstly, let's look at what the reported auction clearance rates for Melbourne, Sydney and Brisbane actually were for the weekend just gone;

·Melbourne - 73% - at the end of last year auction clearance rates were around 80%
·Sydney - 58% - similar to last year's clearance rates
·Brisbane – 59%

Okay, so in Melbourne real estate agents enjoyed the unprecedented luxury of selling almost all of their auction stock for the better part of last year. But the reality is that auction clearance rates of 70% to 80% plus, such as we were seeing, are unsustainable and only occurred because we had a short sharp hard burst of buyer activity from due to pent up demand from both owner occupiers and investors.

In fact during much of the last decade and particularly in the heady property markets of 1997 -2003, auction clearance rates in Melbourne consistently sat in the mid 60 percentile range. Further illustrating that what occurred last year was completely out of the ordinary.

In fact the clearance rates reported from last weekend do not really indicate an unhealthy property market in critical decline at all. When you look at the overall picture rather than taking these figures at face value, the inner city property market in Victoria is still quite vigorous. It's all about interpretation.

Let's take a closer look at Melbourne's auction results to illustrate how these figures may have been manipulated and/or misinterpreted to make a more dramatic news story;

o Clearance rate last weekend – 73% 
o Number of properties auctioned = 1138. Total number of properties sold = 834
oNumber of properties auctioned the same weekend last year = 886. Total number of properties sold = 709
o Conclusion - even if there was an 80% clearance rate last year v 73% this year, more properties were sold this weekend than the same weekend last year.

In other words, the market is still healthy and in actual fact, it would seem that there are more sellers and buyers out there.

Taking a similar big picture view of Brisbane, there were actually 62% more properties for sale over the weekend just gone than for the same period last year. Therefore, although the clearance rate was 59% down from last year's 67.6%, in reality more properties sold.

Now you may ask, "Why were there more properties on the market this weekend than for the same time last year?"

Well I can tell you that in the Melbourne market, a number of factors were at play to cause this increase in auction stock levels.

Firstly in March we have a big holiday weekend on the 8th, 9th and 10th with the combined celebrations of Labour Day, Moomba and the Grand Prix. This is closely followed by the Easter weekend from the 21st to the 24th. For obvious reasons, the auction markets for these two weekends are virtually shut down, making the better part of March a write off for this type of sales activity.

When faced with these shorter months, agents encourage their clients to hurry their houses onto the market, strike quick and hard with sales campaigns and get the auction happening well before these types of interruptions can potentially jeopardize their chance of a sale.

From my experience as a buyer's agent, we had a number of agents listing sales and auctions in mid to late November and throughout December. Although we successfully purchased a few of these privately almost as soon as they hit the books, many of these properties were not scheduled for sale until well into February. Add these to the further listings that agents signed up in January, and you can see that there has certainly been a lot of auction activity to squeeze into a fairly tight available time allocation.

That being said, there is no denying that these clearance rates do indicate a slight change in market sentiment. It's certainly nothing to panic over, but it does have to be noted that things have slowed down somewhat from the breakneck speed certain markets reached last year.

So what does this changing market sentiment mean? Well I think we can safely deduce the following;
·Potential buyers are being more cautious and more selective.
·More vendors are putting their properties on the market to get in before interest rates increase again.
·Good properties are still selling – but buyers are being more selective.

The fantastic news for investors is that any slow down in the market will create opportunities for buyers who take a long term perspective.

How does this work you may ask. Well, life still rolls on. People are still getting married, people are still getting divorced, people are still having babies, 170,000 immigrants are permanently relocating to Australia this year alone, and so on and so on.

And the bottom line is this - bricks and mortar is an essential commodity – everyone needs a roof over their heads. And if they don't buy a home, they'll rent one, thus pushing rental prices up even further!

One of the key factors to watch this year will be interest rates. There is no doubt that if the Reserve Bank hits home owners and would-be home owners with a further 2 rises this year, the market's confidence will change considerably once more.

At the moment though, we can quite confidently look at the absolute number of properties sold (substantially more than this time last year) and determine that the inner city market generally has taken the recent interest rate rise in it's stride. Overall, this should be an interesting year for investors and owner occupiers alike in Australian property markets.

One final word on those hyped up auction clearance rates…it is interesting to note the widely varying reports from one media source to another. Here in Melbourne, The Age had figures well over 70%, whereas the Financial Review reported the number at well under 70%. Obviously the numbers are coming from different statistical bases and going to press at different times.

The point is – you really can't believe the hype!

So, what can we believe? You can bank on the fact that in the long term the value of well located properties has doubled every 7 – 10 years, which means many properties have outperformed these averages. These are the type of properties we like to buy for our clients.

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