Westpac Senior Economist Matthew Hassan said the cash rate hike accelerated the price decline, which had first been driven by rising fixed mortgage rates and stretched affordability, leaving the market more sensitive. to rate changes.
Post-auction sales showed that there was still strong demand from buyers for right-priced properties, but this was offset by the high proportion of properties withdrawn from auction in Sydney.
“About 25 percent of auctions are being pulled…in many cases there are simply no bidders, and the sellers are presumably not confident [to go ahead],” he said.
Hassan believes that Sydney is close to 40 per cent of its market down and has forecast price declines of 18 per cent. Price declines are likely to continue until the cash rate stabilizes, at an expected peak of 3.5 percent early next year.
The cash rate is expected to rise for the fifth straight month at next week’s Reserve Bank meeting.
Auctioneer Damien Cooley of Cooley Auctions said the main reasons the properties turned over were a mismatch between buyer and seller expectations, or less desirable property features.
“Buyers aren’t prepared to meet the vendor’s expected price…some might say the vendor is overpriced, others might say buyers don’t see the right value, and both may be correct,” he said.
While some sellers needed to lower their asking price to make a post-auction deal, others sold for much more than their highest auction bid, Cooley said.
The best chance of a post-auction sale was typically within two weeks, he noted. Interested buyers who thought the property may be beyond their budget would likely return. New buyers were also more likely to show interest in this time period.
Properties that sold eight or nine weeks later were typically overpriced and saw several markdowns during the sales campaign, he said.
Sales agent Catherine Murphy of The Agency North said interested buyers were increasingly being held back at auctions, even in instances with multiple bidders.
“If there are other people who are prepared to raise their hands, they will see the social proof and feel comfortable to bid. However, if they don’t…they are much more likely to wait,” she said.
While sellers and agents may be reluctant to go to auction in a colder market, Murphy noted that the auction process typically led to faster, stronger sales.
Earlier this year, he sold Sue Lennox’s home in Epping more than six weeks after she passed a $1.65 million offer. There were takers in the crowd, but none made offers.
The pair received lower post-auction bids, but were eventually sold for $1.71 million to a family interested in recruiting from the local school.
Lennox, which sold to downsize, felt that talk of rate hikes put off interested parties. When she passed her house, she was relieved that she hadn’t already shopped elsewhere. Despite the stress of the process, she was satisfied with the result.
“I wasn’t locked into having to sell right away, I was quite prepared to play the waiting game and get the best price,” she said.
“When I was interviewing real estate agents [at the start] the price that some of them were putting around the property was unbelievable…but as the market changed, I thought, look, I had to be reasonable about what my property could attract.”
Her post-auction sale also meant she was able to negotiate a deal with the buyer, in which she rented her own home for several months, while she looked to purchase her new home.