Melbourne home sellers are taking a new risk to get their home under the hammer.
Melbourne is set to record its third straight week with an auction clearance rate below 50 per cent amid warnings it’s a sign people are second guessing committing to Victoria.
Real estate industry professionals have also revealed some home sellers are getting desperate enough to agree to buyers bidding at their auction subject to finance or building and pest inspections, which could lead to the sale being scrapped after the fact.
Auctions are ordinarily considered unconditional sales that will cost a buyer their deposit if they pull out.
RELATED: Albo housing attack to wipe $3bn from Vic budget
Albo tax play drives Melb auctions to record low
Auction hacks to turn Melb sale slump to $100k win
While the city recorded a preliminary 52.6 per cent result on Saturday that gave home sellers a glimmer of hope, a surge of failed sales reported on Monday morning slashed the figure to 47.1 per cent.
Any sales to buyers who have a clause allowing them not to proceed could also still fall through and reduce that figure further.
PropTrack economist Luc Redman said clearance rates had been on a “downward trajectory” since the start of the year, as a result of interest-rate rises, the cost-of-living crisis and changes to property investor tax benefits in the federal budget in May.
REA Group analyst Luc Redman believes lower clearance rates could be present throughout the short term.
“Clearance rates remain at low levels by recent standards,” Mr Redman said.
“Winter is usually a slower period for the property market and may mean that current clearance rates will remain low over the short term, until seller expectations change or the market shifts.”
In recent weeks, the figure has revised upwards slightly by the time the final clearance rate is recorded on Wednesday, but rarely more than a single percentage point, suggesting the city is likely to wind up with another week at around the 48 per cent mark — which was the average across June.
Property Council Victorian deputy executive director Andrew Lowcock said the clearance rate reflected “incredibly low confidence” in the Victorian property market and had broader ramifications than for just those buying and selling homes.
Less than half Melbourne’s auctions are ending with a sale in the aftermath of major changes to investor property tax benefits.
“When buyers and investors are more cautious, it has flow-on effects for housing supply, construction activity and the broader economy,” Mr Lowcock said.
“Markets respond to confidence. Right now, higher taxes, higher costs and ongoing uncertainty are making many people think twice before committing to Victoria.”
Real Estate Institute of Victoria chief executive Toby Balazs said the ongoing poor results from the city’s auction market were a sign more needed to be done to restore confidence.
“In a market where confidence is really impacted, significant changes to the structural process for auctions is, timing wise, certainly something we would recommend against,” Mr Balazs said.
Real Estate Buyers Agents Association of Australia Victorian state representative Matthew Scafidi said he was encountering scenarios where buyers were being cleared by agents to bid at auctions subject to building and pest inspections and even subject to finance.
REBAA Victoria representative and Abode buyer’s agent Matthew Scafidi has revealed some desperate sellers are accepting bids subject to finance and even building and pest inspections.
“Vendors can agree to anything to get them to the price they want,” Mr Scafidi said.
“But they will get sold and if there are problems, that will have to be discussed and sorted through.
“There will be some that fall over based on the building and pest inspection or finance, and it will be announced as sold, but it might need to go back on the market.”
He added that there was also a “huge influx” of homes being offered off market from sellers who didn’t want to risk the open market at the moment.
Property Home Base buyer’s agent Julie DeBondt-Barker added she was seeing signs buyers were pulling back from even exploring the market at present, not just getting ready to go and holding off amid the market jitters.
Property Home Base founder and buyer’s advocate Julie DeBondt-Barker says buyers aren’t just holding back, they’re not even looking at homes as they wait for the market fallout.
Ms DeBondt Barker said she had noted an almost 50 per cent drop off in buyer inquiry since the federal budget was announced.
“They are standing back with their arms folded and waiting to see what happens, so there are not as many buyers, not at all,” she said.
Melbourne Clearance Rates This Year
July 6 – 47.1 per cent, revision pending
June 29 – 46.6 per cent, revised to 46.9 per cent
June 22 – 46 per cent, revised to 46.4 per cent
June 15 – 50.5 per cent, revised to 50.9 per cent
June 8 – 46.4 per cent, revised to 47.2 per cent
June 1 – 50.6 per cent, unrevised
May 25 – 50.3 per cent, revised to 51.4 per cent
May 18 – 52.6 per cent, revised to 51.4 per cent
May 11 – 51.8 per cent, revised 52.2 per cent
May 4 – 54.3 per cent, revised to 51.7 per cent
April 27 – 53 per cent, revised to 51.7 per cent
April 20 – 52.8 per cent, revised to 52.9 per cent
April 13 – 50.6 per cent, revised to 51.9 per cent
April 6 – 54.5 per cent, revised to 55.7 per cent
March 30 – 54.5 per cent, revised to 55.4 per cent
March 23 – 54.7 per cent, revised to 55.6 per cent
March 17 – 57.5 per cent, unrevised
Source: PropTrack
Data tracks intermediary clearance rate on Monday, and final revised figure by Wednesday, where available.
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: Brighton’s glow up goes from Bec Judd to $50k record
English (US) · 