Sydney auctions: Home sellers get weakest results since auction ban
Sydney’s auction market has hit its weakest level since on-site auctions and open homes were banned during the first Covid containment measures in early 2020.
Preliminary auction results from last week showed just over half the properties scheduled to go under the hammer sold last week, the lowest success rate since April 2020.
But most of the sales were pre-auction deals.
Only about one in four of all the homes that were due to go under the hammer sold at an actual auction event where the gavel was dropped.
MORE: Buyers pay millions for ‘good feng shui’
Bold property move makes couple $25m in 2 years
Among the properties that didn’t sell, about 45 per cent passed in at auction, while the remainder were withdrawn prior to going under the hammer – normally a sign of lacklustre buyer interest.
Real estate agents reported many of the homes that passed in did not attract a single bid.
Buyer’s agent Michelle May said there was usually a big gulf in quality between the homes passing in and those selling successfully.
Properties that were struggling to sell were often “compromised” and included features most buyers didn’t like, such as a location on a main road, unusual floorplan or bad aspect, Ms May said.
“Cookie cutter-style” units in high-rise buildings were also getting passed over by buyers – unless they were priced very low, she said.
The auctions that have attracted a crowd have tended to be for rare offerings. Picture: David Swift
Well-presented properties with ample bedrooms, a renovated interior and other attributes that “ticked the boxes” of buyers were still attracting competition at auction and sold for high prices.
Ms May explained that this was not the case in 2021, when buyers were not as picky and nearly all types of properties sold well.
PropertyBuyer director and former president of the Real Estate Buyers Agents Association of Australia Rich Harvey said all the economic “headwinds” in the market were tanking buyer confidence.
Those bold enough to make offers on properties were getting good deals, he said.
“We are already seeing price drops,” Mr Harvey said. “Properties that would have sold for $3 million in last year’s boom are selling for $2.7, $2.8 million.”
PropTrack’s Home Price Index released in early June showed Sydney home prices dropped over April and May, with the latter monthly drop the highest in the country at 0.29 per cent.
With interest rates expected to rise throughout the year, numerous lenders are forecasting more price drops.
Commonwealth Bank predictions have the median in Sydney falling 18 per cent over the next two years, including an 11 per cent drop over 2022 and a 7 per cent drop over 2023.
There has been a gulf between the types of homes selling under the hammer and those passing in.
ANZ projections showed the median would drop 20 per cent over the two year period.
Looming prices falls needed to be put into perspective, Mr Harvey said.
“The general property herd will panic,” he said. “The reality is that the market goes in cycles. This is a correction we are having coming off of 30 per cent price growth (last year).
“It’s the tough medicine we had to have to get the market back to normal.”
Mr Harvey said price falls would vary considerably by property.
“The problem properties, the ones stuck at the bottom of a gully or under big power lines, always see the biggest drops during a correction,” he said.
“It’s obviously a lot harder to get a quality home in a popular market for a bargain. These properties attract more competition.”