A string of popular Sydney regions are offering some of the biggest discounts on homes for sale, new data reveals, as the property market continues to turn in buyers’ favour.
More choice of homes listed for sale, sky-high prices and the first interest rate rise of many have dampened the market’s growth in recent months as buyers can no longer pay top dollar.
And vendors are slashing their asking prices on their homes to meet the changing market to get a sale done, agents say.
The region of Kogarah and Rockdale led the way in April, where houses on average were selling 10. 1 per cent lower than their asking price based on private treaty sales on Domain data. That is up from 7. 4 per cent the year before.
It was followed by North Sydney and Mosman, where houses were selling 8. 1 per cent lower than their asking, up from 6. 3 per cent the year prior. The figures do not include auction sales, the method used for homes judged likely to attract the highest level of competition.
Domain chief of research and economics Dr Nicola Powell said sellers were still finding the new normal after a record run up in prices.
Discounting really gives us an insight into whether sellers are pricing their homes to meet the market. You can clearly see an increase in discounting that means sellers are not being as accurate with their listing price, and they are having to sell for below that, Powell said.
It is more telling of the areas of the buyer mismatch and that could indicate that there is further price weakness in these suburbs.
She said the regions which had seen a reduction in discounts compared to last year had peaked earlier, such as the eastern suburbs – north region.
Westpac’s senior economist Matthew Hassan said it was clear the market had entered into a correction phase, and it was a seller’s time to get out.
There will be more jolts to sentiment and more decline in buyer sentiment, and we think we’re already in a correction phase, Hassan said. We’ll see clear evidence of a correction phase and a real shift to a buyer’s market after a seller’s market for the past 18 months.
He said with more rate rises on the way, sellers had a choice to get out now or wait between two or three years before they could make a comfortable sale.
Unlike previous periods, this time around this looks like much more challenging inflation and a sustained period of rapid rate hikes. They either try and drum up more buyers by lowering their price expectations or take it off the market and sit it out.
McGrath Brighton Le Sands’ Trent Tarbey said sellers in the Rockdale and Kogarah region were initially asking for prices achieved last year even though the market has since moved on.
Anything that has transacted in the last six to eight weeks is a truer representation. The reality is we’re coming through a softer market in comparison to what has been, Tarbey said, adding that the majority of good-quality houses were still sold in a competitive auction environment.
Sometimes they might go for sale [as private treaty] for the ones that aren’t as desirable or sellable.
David Murphy, principal of David Murphy Residential, said the gains of the second half of 2021 have already been erased in regions like Mosman and North Sydney, which are market leaders in upswings and downturns.
We are seeing a higher level of price adjustments because some sellers are trying to get prices, say, that were being achieved in the last quarter of 2021 and doesn’t align with the market now, Murphy said. So those gains in many instances have been erased.
He noted that prices were still ahead of, or equal to, to 12 months ago for now.
Those sale prices are correlating to the first and second quarter of last year. Prices are still well ahead of where they were 12 months ago, he said.
It’s actually a healthy thing for the market. It has come down, it’s a slightly more level playing field for buyers.
Michelle May Buyers Agents principal Michelle May said there was bigger discounting overall in Sydney.
I’m getting a lot more phone calls from agents … because they don’t have the depth of buyer pools out there. That did not happen six months ago, she said.
She said it went hand-in-hand with regular emails from agents on price adjustments.
Six months ago price guides were going up and now a lot of them are coming back down and [there are] agents who are not willing to quote at all, saying they want to see what the market says. The whole conversation has changed.
May said discounting was often property-specific, with A-grade properties still finding enough competition to go to auction and achieving a strong result.