Last year it was buyers who were in the hot seat, but now pressure is mounting on home sellers after a high incidence of Sydney properties coming up for auction, sometimes without a bid.
Home sellers have had a hard time selling their properties at auction this weekend as buyers fear rising interest rates and a declining market pulled out of bidding.
This week’s final results of nearly 1,000 planned Sydney auctions are not all in yet, but preliminary indicators suggested there was a high incidence of properties coming in without a bid.
There were also a large number of sellers who withdrew their homes from auction – normally an indication that there was not enough interest from bidders in the property.
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Housing experts said the problem for sellers was not a lack of buyers, as there were still many home seekers on the market with high budgets.
The bigger problem was a lack of buyer confidence. Many of the current home seekers in the market feared that they would pay a higher price than they would pay in three or four months.
It comes as PropTrack data showed Sydney house prices fell in April, the first median drop in more than 18 months. Prices had stopped growing for months before the decline.
With the Reserve Bank announcing its first rate hike in 11 years earlier this month, and lenders warning of further rate hikes, additional downward pressure is expected to come on prices.
The pattern of buyers withdrawing from sales was not as pronounced for properties perceived as rare offerings, quality homes or large estates with some room for improvement.
On the other hand, buyers were most wary of homes they perceive as a disadvantage, such as a dated interior or location on a busy road. Small units in large high-rises also rarely attracted great interest from bidders.
Only about 55 percent of the homes listed for auction last week have been sold, with nearly half switching hands in pre-auction deals. Auctions had a similar conversion rate the week before.
The cleanup rate was 75 percent over much of February.
Avenue Auctions director Andrew Cooley said a common theme with properties not selling was that the seller set his expectations at prices seen two or three months ago when it was a different market.
These sellers tended to stick to these high prices because it was the amounts their properties were valued at when they started their sales campaigns.
Among the properties that came up for auction this weekend was a four-bedroom house on Calotis Crescent in Denham Court, south-west Sydney.
The house received an offer of $1.2 million from the seller after it failed to attract bids from the registered parties.
No bids have been placed on a unit on Oaks Ave in Cremorne, a suburb on the lower north coast.
An acreage on Kenthurst Rd in the northwestern suburb of Dural accepted a $5.5 million offer from a seller. Ten bids were made by the registered parties, the highest being $5.05 million.
In Gladesville, a house on 12A Cowell St made an offer of $3.75 million.
In Waverley, a cottage on Leichhardt St, described as ‘blank canvas’ for remodelers or builders, sold for $2.95 million, but only after a lengthy pause in proceedings when it was understood that the sellers had dropped their reserve.
The auctioneer was heard to say to the bidders, “If this was last year, we would be receiving bids of about $3.5 million”.
It was a similar situation to a Concord house on Kingston Ave. It sold for $3.8 million, but only after the $3.9 million reserve was gone.
Auctioneer Michael Garofolo said there would be more of these kinds of results until sellers started lowering their expectations to “meet the market,” but he cautioned that some perspective was needed.
“You may be going lower than what you would get a few months ago, but when 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 brutal string of results