A major standoff between unrealistic sellers and exhausted buyers has pushed Australia’s auction market into reverse, with capital city clearance rates again falling below 50 per cent.
Across the nation’s capitals, 1882 auctions were held this week, a 33.1 per cent rise on the previous week, but still 41.8 per cent lower than the same time last year.
Cotality research director Tim Lawless said the preliminary clearance rate slipped on the higher volume of auctions, with 48.4 per cent of capital city auctions reporting a successful result so far, down from 51.2 per cent a week earlier.
Lawless noted the clearance rate has been below the 50 per cent mark in three of the past four weeks, with one state providing the perfect example of current market volatility.
“Melbourne saw a sharp rise in auction activity this week, with the number of homes taken to auction increasing from 495 to 831,” he said.
“Despite the jump, auction volumes remain 54.7 per cent below levels seen a year ago. The substantial reduction in auction numbers likely reflects a combination of softer selling conditions and the introduction of the state’s reserve price transparency requirements, which may have prompted some vendors to reconsider the auction method of sale.”
Price Buyers Agents founder Glenn Price said talk among industry professionals is that the sales playbooks are failing to cut through in the current climate.
“An agent I spoke to this week told me a lot of the auctions that failed shouldn’t have,” Price said.
“The bids were there, they were solid, and they were close enough. Some agents just weren’t receptive or quick enough to turn them into a sale.”
In Price’s view, vendors are digging in their heels, while too many agents advising them “are still living in the boom”.
Thomas McGlynn, Ray White chief executive of performance and value, echoed concerns around a growing disconnect between buyers and sellers.
“The challenge continues to be the gap between what buyers are prepared to pay and what sellers are willing to accept, which is making it harder for transactions to come together,” he said.
“It’s another reminder that the national numbers don’t always tell the full story, and why understanding what’s happening in your own local market is just as important as following the broader trends.”
Beyond seller sentiment, policy shifts are also changing the state of Australia’s property market decline.
Nerida Conisbee, Ray White Group chief economist, noted a stark reversal in how different price tiers are performing.
“For much of the past year, Australia’s more affordable properties have been outperforming the expensive end o
f the market. That has now changed,” Conisbee said.
“Since the federal budget in May, higher-priced homes have started holding their value better, while cheaper properties have been experiencing sharper declines.”
Conisbee noted that the withdrawal of property investors following the May budget’s negative gearing and capital gains tax reforms has disproportionately hit entry-level stock, creating an unexpected hurdle for new buyers.
“For first home buyers, it creates a dilemma. Before purchasing, they understandably want prices to be as affordable as possible,” she said.
“Reducing investor competition can help them enter the market, particularly when combined with the 5 per cent deposit scheme. But once they have purchased, their priorities change.
“Like every other homeowner, they want their property to increase in value. And this is where the longer-term consequences become more complicated.”
Where the market heads next will largely depend on the broad economic path and borrowing costs.
When the Reserve Bank of Australia board hands down its next rate decision on November 3, Melbourne Cup Day, Price expects the central bank will keep the cash rate on hold at 4.60 per cent.
“Unemployment is at a five-year high of 4.7 per cent and national home values are 5.2 per cent below the March peak. That’s a hold,” he said.
“But here’s the thing. A hold will do nothing to this market. It won’t bring buyers back.”
Young family trumps developer in fierce $7m battle for Maroubra ‘time capsule’
Held by the same family for 50 years, the 1920s bungalow smashed its price guide.
Local farmers beat Melbourne bidders to a $357,000 Californian bungalow
The affordable fixer-upper on a classic quarter-acre block sold at auction for less than half the price of a typical Melbourne house.
See more news from Domain in your Google search results.
The information on this website is intended to be of a general nature only and doesn't consider your objectives, financial situation or needs.
