Cooling autumn market forces sellers to reset expectations 

Cotality’s Property Market Indicator Summary for the week ending 12 April showed the preliminary auction clearance rate was 57.9 per cent, only up slightly from the Easter long weekend, at 55.5 per cent.

Cotality’s head of research, Tim Lawless, said new listing volumes had been strong at the beginning of the year, but activity was projected to quieten and tail off as the weather cooled down.

“We moved through the seasonal peak in volume, but in terms of clearance rates and value growth, we’re expecting the market to face some headwinds – we’re already seeing some evidence of values falling in Sydney and Melbourne,” he told SPI.

“Clearance rates are well below average. They’re sort of holding in the low to mid 50 per cent range. The long run average is about 66 per cent, so that’s well below average.”

According to Menck White auctioneer Clarence White, April had always been a lower-volume month, but listings will plummet further amid the upcoming Anzac Day weekend.

White said listings traditionally picked back up in May; this year, his business hasn’t seen the usual number of bookings so far, describing it as a small trickle rather than the usual flow.

White said it would be a “wait and see” market, as rising rates, potential capital gains tax (CGT) changes, the war in the Middle East, and petrol price spikes fuelled buyer uncertainty.

“You’ve got a perfect storm of factors that have undermined confidence and just made everyone pull back from the table.”

He said purchasers were electing to pull back from the market rather than taking action, watching cautiously to see whether economic pressures would subside, with sellers needing to adjust.

“Anyone looking to sell their home will have to be quite realistic that the market has changed, particularly in Sydney and Melbourne and the major auction markets.”

According to White, to navigate the changing market, sellers should choose a trustworthy agent with realistic pricing expectations, rather than someone who simply tells them the highest price.

“You've got to have your feet on the ground about price at the moment, otherwise you just won’t ‘get sold’,” White said.

Regarding pricing, he said many vendors made the mistake of believing their property had grown by a certain amount because they had it for a specific period, but this was not necessarily the case.

“Sydney properties $2 million and upwards haven't grown in value since the pandemic. Some of them are selling at lower prices, and most vendors have not managed to understand that. And that's been really challenging,” he said.

White added that having price guides in a property campaign was essential, enabling sellers to gain more traction as buyers can see comparable sales to inform their purchase.

“You've got to be pretty sharp on your price guides in order to get people involved and engaged and interested.”

Additionally, White said, while presentation and staging of a home were always important, they were pivotal in a buyer’s market to increase the chance of attracting interest.

“[Buyers] are the same as they always are. You've got to make sure that house is looking spic and span. The buyer of today has a fair bit of choice.”

For investors, White said selling a property with a tenant still living in it would negatively impact the campaign and reduce its appeal to buyers looking to use the home immediately.

“You've got to get the tenants out, offer it vacant, tidy up things that need to be tidy up, style it so that it presents as well as it can.”

According to Lawless, there was a chance that selling conditions would become more challenging over the coming months, particularly if there were further interest rate rises.

However, he said, regardless, this year’s trend would follow the typical autumn seasonal pattern where auction numbers and listings broadly trended lower.

“Typically, we see activity ramping up as we move into spring, so that will probably be a good test to the depth of demand in the market when we see that normal seasonal ramp up.”

“But at the moment, it really depends on what happens with inflation and what happens with interest rates and whether or not we see this conflict in the Middle East being resolved until then,” he concluded.

Tags:

• Latest

Share