New PropTrack data has spotlighted last week’s auction clearance rates of 40.4 per cent in Sydney. Picture Daily Telegraph / Monique Harmer
Sydney’s once-frenzied auction market has taken another hit, with buyers now gripped by a new emotion: the fear of overpaying.
The panic that once drove buyers to throw in ever-higher bids is evaporating fast, replaced by caution, hesitation and a growing belief that tomorrow’s price could be lower than today’s. This caution led to another grim week under the hammer, with just 40.4 per cent of Sydney auctions actually producing a sale, spotlighting how sharply conditions have turned against sellers.
Even that figure masks deeper weakness: most homes that failed to sell were pulled from auction before they ever faced the market, while many of the properties counted as sold were snapped up in pre-auction deals rather than under the hammer.
The PropTrack figures from Saturday revealed out of 401 Sydney auctions, 111 sold prior, 46 sold at auction, 46 homes passed in, 193 were withdrawn and five homes sold after.
It was ninth time in the 10 weeks since the May federal budget in which the Sydney auction clearance rate went below 50 per cent – the mark of a falling market strongly favouring buyers.
Many buyers remain cautious to place bids at auction amid economic uncertainty and falling house prices. Picture: Jeremy Piper
The last time Sydney auction clearance rates were this low for such a sustained period was at the tail of 2018, at the height of the Hayne Royal Commission into banking.
Auction clearance rates were also similar during the global financial crisis, swinging from 38-43 per cent over December 2008.
REA Senior Economist Angus Moore said clearance rates have been bouncing around the high 30s to low 40s more or less since the end of May, after trending down across the start of the year.
“That downtrend reflects softening conditions after the RBA started raising rates, and perhaps some pullback in investor demand post-Budget, though clearance rates were already declining well before the Budget,” he said.
MORE: ‘Scared’ investors abandon major area
REA Senior Economist Angus Moore said auction clearance rates have been bouncing around the high 30s to low 40s more or less since the end of May
“It also reflects there has been quite a lot of homes for sale across Sydney, which has made any given home a bit less competitive.
“Even in June, the number of homes listed for sale across Sydney was up 10 per cent compared to the same time last year.”
Ray White Head of Auctions NSW David McMahon said last week was one of their weakest, with properties that sold under the hammer on auction day at 45 per cent.
“That number for us has been fairly healthy throughout the year at 55 per cent, although less from in the 60s than it was last year – for last week for that to go down to 45 per cent I think is quite reflective of the market at the moment,” he said.
“The market has really been the same since mid-Feb to March, there hasn’t been much change in sentiment and confidence.”
Mr McMahon said no market or style of property is currently outperforming another, with auctions depending more heavily on the agent you are working with, the motivation of the vendor and if their expectations are in line with current market feedback.
“Sometimes that’s not the case and vendors are chasing perhaps a price above the market,” he said.
He added withdrawn properties have become more common this year, driven primarily by vendors seeking a price that the market is now below.
“(Vendors) might make the decision to withdraw their property from auction because they feel as if maybe that gap between them and the market is not closable or the price they’re looking to achieve on auction day is not realistic in the current market,” he said.
Ray White Head of Auctions NSW David McMahon said a rise in withdrawn properties was influenced by vendors not setting realistic expectations in the current market. Picture: John Fotiadis
“When a market is adjusting, buyers are unsure as to what is market value for them to buy a property at and sellers are still unsure around what is market value for them to sell their property at.
“Everyone is still working out what is the new baseline of the marketplace, I don’t feel like we’re there yet.”
Mr McMahon said conflict in the Middle East, policy changes and interest rates were factors for this adjustment, adding that greater certainty around the direction of interest rates would boost buyer confidence and support stronger auction activity.
“It’s when there’s uncertainty around (interest rate) holds, cuts or rises that uncertainty still creeps in, which makes them (buyers) less hesitant to commit to a property, put their hand up at auction and transact on a property,” he said.
“The only lever that is going to drive confidence back into the market is when we have a really clear view of interest rates and I don’t know if that’s possible.
“That’ll be the over the next six months I think that’ll be the most important thing to track.”
While some homes continue to sell at auction, several have done so only after vendors have amended their reserve prices.
44 Whites Road, Shanes Park
11 Lorna Ave, Blakehurst
This included a Western Sydney two-bedroom, two-bathroom home at 44 Whites Road, Shanes Park sold under the hammer for $2.66m.
“The owners were quite realistic in line with what it would be worth,” Ray White United Group sales agent Joshua Cassells said.
“The auctioneer held off starting until it got to a more reasonable figure. Once it started, it went straight to negotiation and basically the owner and I were happy to accept what it went for.”
Despite the softer conditions other homes continue to see strong results like 11 Lorna Ave, Blackhurst that sold under the hammer on Saturday for $3.6m, above its $3.2m reserve with five registered bidders and four active, all bidders were families upsizing.
English (US) · 