Last year it was the buyers who were in the hot seat, but now pressure is mounting on home sellers after a high incidence of Sydney properties going up for auction, sometimes without bids.
Home sellers have had a hard time selling their properties at auction this weekend as buyers spooked by interest rate hikes and the market slump pulled back from the offer.
Final results this week from Sydney’s nearly 1,000 scheduled auctions are yet to come in, but preliminary indicators suggested there was a high incidence of properties passing without a bid.
There were also a large number of sellers withdrawing their homes from the auction, usually an indicator that there was not enough bidder interest in the property.
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Housing experts said the problem for sellers was not a lack of buyers, because there were still plenty of home seekers on the market with big budgets.
The biggest problem was lack of buyer confidence. It was reported that many of today’s home seekers on the market feared paying a higher price than they could afford in three or four months.
It comes as PropTrack data showed Sydney house prices fell in April, the first average drop in more than 18 months. Prices had stopped growing for months before the crash.
With the Reserve Bank’s announcement of the first cash rate hike in 11 years earlier this month, and lenders warning of more rate hikes to come, additional downward pressure on prices is expected. .
The pattern of buyers pulling out of sales was not as pronounced with properties perceived as rare deals, quality homes, or large lots with some room for improvement.
On the other hand, buyers were the most hesitant with properties they felt had drawbacks, such as dated interiors or a location on a busy street. Small units in large high-rise buildings rarely attracted significant interest from bidders.
Only about 55 percent of properties scheduled for auction last week have sold, with nearly half changing hands in pre-auction deals. Auctions had a similar success rate the week before.
The settlement rate was 75 percent for much of February.
Avenue Auctions director Andrew Cooley said a common theme among the properties that didn’t sell was that the seller set their expectations on prices seen two or three months ago when it was a different market.
These sellers tended to commit to these high prices because they were the amounts at which their properties were appraised when they began their sales campaigns.
Among the properties up for auction this weekend was a four-bedroom house on Calotis Crescent in Denham Court in south-west Sydney.
The house passed on a supplier offer of $1.2 million after failing to attract any offers from registered parties.
No bids were submitted for a unit on Oaks Ave in the north shore suburb of Cremorne.
A piece of land on Kenthurst Rd in the northwest suburb of Dural passed with a vendor offer of $5.5 million. Ten offers were made from the parties of record, with the highest being $5.05 million.
In Gladesville, a house at 12A Cowell St went through with an offer of $3.75 million.
In Waverley, a country house on Leichhardt St, described as a “blank canvas” for renovators or builders, sold for $2.95 million, but only after a lengthy pause in proceedings during which it is understood that sellers They abandoned their reservation.
The auctioneer could be heard telling bidders, “If this was last year, we’d be bidding around $3.5 million.”
It was a similar situation with a Concord house on Kingston Ave. It sold for $3.8 million, but only after the $3.9 million reserve was removed.
Auctioneer Michael Garofolo said there would be more results like these until sellers began to abandon their “know the market” expectations, but cautioned that some perspective was needed.
“You may be paying less than you would a few months ago, but if you compare it to two years ago, you’ll still get a fantastic price.”
Originally published as Sydney auctions: Home sellers under pressure to cut prices amid brutal run of results