Melbourne’s auction withdrawal rate is on the rise, and it’s not good news for sellers.
Melbourne home sellers are cancelling auctions at a rate closing on one in five a week, with hundreds walking away from their plans in the past fortnight alone.
Experts believe rising interest rates and uncertainty in the aftermath of significant property tax changes announced for negative gearing and capital gains tax in last week’s federal budget are behind a growing share of sellers walking away.
Latest sales stats from PropTrack show 155 would-be sellers pulled the pin without giving buyers a chance to bid last week.
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Against the total number of hammer-time results, including withdrawals, it accounted for 17.94 per cent of the total.
The week prior the 166 withdrawals accounted for 16.89 per cent of total auction results.
In May last year, withdrawals amounted to just 12.73 per cent of auction sales outcomes.
Professional auctioneer Andy Reid said pulling the home from auction could cost sellers in a few ways, first by leaving no chance for a buyer who had been keeping their cards close to their chest to come in and negotiate, and second by sending an alert to other buyers that things had gone badly.
Professional auctioneer Andy Reid has warned sellers could be exposing weaknesses by withdrawing rather than pursuing an auction without knowing there would be bidders.
“It screams that the owner has lost confidence,” Mr Reid said.
For sellers who were being told their agent didn’t believe any buyers would turn up, he estimated he was still selling close to 70 per cent of homes that went to auction in similar circumstances — even if it went to a buyer who had thought they couldn’t bid because they needed to add conditions to the sale.
Property Investment Professionals of Australia chair and professional homebuyer Cate Bakos said the trend could also reflect sellers realising that a home they thought would sell for a particular price was no longer poised to do so.
Cate Bakos believes seeing a home pass in at auction with no bids could be a harder hit to recover from than withdrawing the home from sale.
“And a lot of vendors are acutely aware that the budget announcements a week ago will have rattled a lot of potential buyers,” Ms Bakos said.
She added that it could also be a defensive play to protect the sale.
“If an auction passes in with no bids, that can make it very hard to sell after that — word gets around,” she said.
PropTrack figures show there are 1048 homes slated to go under the hammer this week, with hotspots in Reservoir, with 23, and Wollert, 20.
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