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Spring property market leaves room for negotiation
Investors continue to have strong negotiation power as spring volumes rise and auction clearance rates drop following two weeks of consecutive increases.
New data showed that the preliminary clearance rate across the combined capitals fell to 54 per cent last week from 58.5 per cent the week prior, undoing two weeks of consecutive rises.
According to Cotality’s Market Indicator Summary, last week saw a 15.6 per cent rise in auction volumes, although they were 30 per cent lower than the same time last year.
Cotality economist Annabell Mezieres said spring listings had been drastically outpacing buyer demand, but it was too soon to determine what the trend would be for the season.
“Auction activity is picking up as we move further into spring following the winter slowdown, but it’s still lower than a year ago, and clearance rates reduced this week as more homes came to market,” she told SPI.
According to Mezieres, expectations of a further interest rate increase this month, and possibly more to come, were weighing heavily on borrowing capacity and potential mortgage costs.
“As diminished purchasing power leads prospective purchasers to adopt a wait-and-see approach, it shows up in softer auction results.”
She said, with more homes on the market and properties taking longer to sell, buyers continued to be in a strong position to negotiate.
“For long-term investors, these conditions may create opportunities to negotiate more favourable purchase prices,” she said.
With more listings coming to market, Mezieres said agents should help vendors remain realistic about pricing, while focusing on creating effective, stand-out campaigns.
“Ongoing uncertainty around interest rates is likely making buyers more cautious, which means vendors may need to adjust their expectations to meet the market.”
The data showed Melbourne’s preliminary clearance rate fell 7.0 percentage points to 56.3 per cent, the weakest in three weeks, while the city held 900 auctions – almost half of all capital city volumes.
In Sydney, the preliminary clearance rate was 54.2 per cent, down 5.4 percentage points on the previous week and the lowest early success rate in seven weeks.
A total of 577 homes went to auction, reflecting a 5.3 per cent rise in volumes.
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In Brisbane, the preliminary clearance rate was 37.5 per cent, a decline of 4.1 percentage points from the previous week.
Adelaide saw a 2.6 percentage point rise to 58.2 per cent, its strongest early result in five weeks.
Meanwhile, Canberra’s preliminary clearance rate increased by 10.6 percentage points to 57.5 per cent.
In Perth 10 auctions were held , with half reporting a successful result so far, while Tasmania held no auctions.
In a post on social media, Real Estate Gym founder Tom Panos said rising volumes were putting pressure on clearance rates, requiring an active approach from agents.
“This is not a market where you can simply put a board up and expect the competition to do the rest,” he said.
According to Panos, recent predictions of another rate hike on September 29 had shaken buyers, with borrowing capacity already constrained.
“When confidence gets shaky, bidders don’t rush in, they hesitate, they negotiate better, and they wait for a reason to act,” he said.
“Auction volumes are still around 30 per cent below the same time last year – people don’t have confidence in it.”
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