Sydney’s auction clearance rate fell back below 50 per cent last month, the lowest result for any October since 2018, but one part of the city bucked the trend.
The eastern suburbs had the highest clearance rate of any area in Greater Sydney, at 55.3 per cent for the month of October – a key period of the spring selling season, Domain data shows.
It comes as rising interest rates and changes to the tax treatment of investment properties have made potential buyers more cautious.
And there are more changes in store . From November 17, real estate agents in NSW will be required to include a selling price or price range on property listings as part of wide-ranging reforms designed to increase transparency for home buyers. Agents have been able to list a property with “price on inquiry”, but the incoming changes will stop this.
Domain chief residential economist Dr Nicola Powell did not think the rule change would affect prices, but she thought it would “create greater transparency for buyers”.
“Buyers are going to be able to make more accurate decisions as to whether a home fits into their budget or not,” she said.
Powell thought the clearance rate had fallen as buyers reacted to interest rate hikes and the federal budget’s policy changes .
Sellers started to react too. Some 28.5 per cent of Sydney’s scheduled auctions were withdrawn last month, the highest on record, as competition evaporated.
“Sydney is a buyer’s market. That is what that clearance rate tells me; it is screaming buyer’s market,” she said.
She said premium areas such as the eastern suburbs fell in price earlier than elsewhere.
“These are high-income, equity-rich locations as well, where people are established in the housing market,” she said. “They could be less impacted by rate hikes and more impacted by the opportunity of purchasing in some of these locations that have pulled back in price, to get their dream home in a premium location.”
Ray White Eastern Beaches selling agent Angus Gorrie said the volume of homes for sale in his area was lower than usual.
“ Anyone selling now has probably adjusted already their price estimate . You are dealing with people that are motivated sellers and aware of market conditions,” he said.
“There are still buyers wanting to live in the east and buy in the east. It is a desirable spot.”
Gorrie’s October sales included a $7 million Maroubra bungalow with period details and knockout ocean views.
But he added the first home buyer apartment market was the strongest segment.
Nearby, Ray White (Phillips & Co) selling agent David Tyrrell agreed there were limited homes for sale in the area, but added some good properties had been coming to market.
“We are running a lot more auctions than we used to,” he said. “Auctions are working better in this marketplace.
“Our market has adjusted quite fast. Everybody sees the new prices and is starting to sell again.”
Tyrrell sold a luxurious Bronte home for $12.12 million at auction, and said many potential buyers were from the north shore, although a local won.
The government pushed ahead with reforms after an investigation by The Sydney Morning Herald and The Age revealed almost half of all property sales at auction in Sydney sold above the guide by more than 10 per cent, wasting some buyers’ time and money as they chased properties they could not afford.
NSW agents, from February 8, must also publish a statement of information covering how an estimated selling price was reached.
Published price guides or ranges have been mandatory in Victoria since 2017, and the state requires three comparable sales to be displayed.
“Together with the tougher penalties and the regulator’s increased powers, we’re confident these reforms will make a real difference in people’s lives and create a fairer property market,” NSW Better Regulation and Fair Trading Minister Anoulack Chanthivong said in a statement.
Sydney’s median house value has fallen 11.1 per cent this year, on Cotality data.
Tim McKibbin, chief executive of the Real Estate Institute of NSW, said some prospective home buyers were sitting on their hands, expecting further price falls, but he didn’t think the incoming reforms would necessarily change the market.
“We’re going to have to let that one play out,” he said.
“With the deepest respect to government, what they’ve done is designed a regulatory environment that works only in a market that is heading north, not one that’s stagnating, or in some areas has come off quite sharply.”
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