Last year it was buyers who were on the hot seat, but now the pressure is mounting on home sellers after a high incidence of Sydney properties being auctioned, sometimes without a bid.
Home sellers have struggled to sell their properties at auction this weekend, with buyers frightened by interest rate hikes and a falling market pulling back on bids.
This week’s final results of Sydney’s nearly 1,000 scheduled auctions have yet to be released, but preliminary indicators suggested that there was a high incidence of properties going unbid.
There were also a large number of sellers who withdrew their homes from the auction – usually an indicator that there was not enough bidder interest in the property.
MORE: How you can get a house for free
Bad girl spinster’s $2 million glamor pad revealed
Housing experts said the problem for sellers was not a lack of buyers, because there were still too many homebuyers on the market with high budgets.
The biggest problem was the lack of buyer confidence. Many of the current home candidates on the market were reported as fearful of paying a higher price than what they would pay in three or four months.
Data from PropTrack showed that home prices in Sydney fell in April, the first average drop in more than 18 months. Prices stopped growing for months before the crash.
With the Reserve Bank announcing the first interest rate hike in 11 years earlier this month, and lenders warning of more rate hikes to come, further downward pressure on prices is expected.
The pattern of buyers pulling back on sales was not as pronounced with properties perceived as rare offerings, quality homes or large plots of land with some room for improvement.
On the other hand, buyers were the most hesitant with properties they perceived as having disadvantages, such as a dated interior or location on a busy road. Small units in large skyscrapers also rarely attracted significant interest from bidders.
Only about 55% 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 clearance 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 the seller setting his expectations at 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 sums their properties were valued at when they started their sales campaigns.
Among the properties up for auction this weekend was a four-bedroom home on Calotis Crescent in Denham Court, southwest Sydney.
The house received a bid of $1.2 million after failing to attract any bids from the registered parties.
No offers have been made for a unit on Oaks Ave, in the north coast suburb of Cremorne.
An area on Kenthurst Rd, in the northwest suburb of Dural, received an offer of $5.5 million. Ten bids were made by the registered parties, with the highest coming in at $5.05 million.
In Gladesville, a home at 12A Cowell St received an offer of $3.75 million.
In Waverley, a cottage on Leichhardt St, described as a “blank canvas” for renovators or builders, sold for $2.95 million, but only after a long pause in proceedings during which sellers are known to have abandoned your reservation.
The auctioneer could be heard telling bidders, “If this were last year, we would be getting bids 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 scrapped.
Auctioneer Michael Garofolo said there would be more results like these until suppliers started to lower their expectations to “meet the market”, but warned that some perspective was needed.
“You might be going lower than you could have been a few months ago, but if you compare it to two years ago, you’re still getting a fantastic price.”
Originally published as Sydney Auctions: Home Sellers Under Pressure to Cut Prices Amid a Brutal Series of Results