Buyers holding the cards as Sydney's auction clearance rate slips below 65 per cent

Value-hunters targeted Sydney’s mid-priced suburbs at the weekend as prices for some auction properties pulled back from the highs of six months ago.

In Miranda, 24 kilometres south of the CBD, a four-bedroom, four-bathroom contemporary home with a lap pool sold reasonably strongly at auction on Saturday. But according to the selling agent, the home went for less than it would have snared in March or April.

Greg Gilbert Real Estate’s Alex Pitsis said the 722-square-metre property at 2 Crookwell Avenue, Miranda, was well supported with 90 groups inspecting the house and four parties registering their intention to bid.

He said the listing was originally quoted at $2 million to $2.3 million but after feedback from prospective buyers, it was requoted at $2.1 million to $2.2 million. On Saturday, the home was declared on the market at $2,195,000 before selling under the hammer for just $10,000 more – $2,205,000.

“It took a process to get to that price, because at the moment the shift in the market means that [selling conditions] are a little bit different to what they were,” Mr Pitsis said.

He said some price premiums that had been paid earlier in the year for good homes in the southern suburbs were no longer in evidence: “But mind you, the prices are still strong. I appraised this property for the vendors about two years ago at $1.8 million. So $2.2 million is still a good sale price for an owner, but if this property was sold, say, six months ago, I think it would have been $2.3 million-plus. That extra little bit isn’t there; or that extra bidder hasn’t turned up, put it that way.”

Even so, the Crookwell Avenue vendors have reason to be well pleased: their property last sold for $312,500 in 2003.

Overall, the city’s residential real estate market is continuing to tread water. At the weekend, the Domain Group posted a 64.9 per cent clearance rate from 605 reported auctions. A further 87 auction properties were withdrawn and the results of about one-third of all the auctions scheduled for Saturday – 300 auctions – were not reported by agents.

• Related: Click here for Saturday’s auction results
• Related: Click here for the Market Snapshot
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The clearance rate for the previous weekend of October 21 and 22 came in at a lacklustre 57.9 per cent after most of the late-reported straggler results were counted. At this time last year, clearance rates were in a bullish 75 per cent to 80 per cent band.

With buyers now starting to hold more of the aces, they are increasingly striving to pay “on the money” prices that are close to a property’s guide price. While the market is very much a suburb by suburb proposition and many owners of sought-after higher-end properties are able to wait until they get their price, the pendulum is swinging towards buyers.

That’s certainly the case when it comes to any property viewed by the market as over-priced. These offerings often just get ignored.

AMP Capital chief economist Shane Oliver said there had been a clear slowing in Sydney’s market, which was struggling in comparison to Melbourne’s residential market.

“The auction clearance rates have been pushing down to 60 per cent after being at 75 per cent earlier this year,” he said. “The volumes are down as well, whereas in Melbourne the slowing has been more modest – it is down from 75 per cent to about 70 per cent

“That is also consistent with what we are seeing with prices, which suggests that Sydney has well and truly softened with price declines, whereas Melbourne is still seeing price growth. That may be a reflection of the stronger population growth to Melbourne.”

At the weekend, affordable properties offering extra bells and whistles garnered some of the strongest interest.

Ten registered bidders signed on to have a go at a North Narrabeen house, marketed as a “home and income” opportunity.

Toby Hutton, from Raine & Horne Manly, said the 1950s fibro cottage had two separate dwellings and needed renovation work.  

There was a $1.5 million guide price and a reserve of $1,625,000. On Saturday, the listing sold for $1,675,000, with four of the registered bidders making offers.

“The property has a three-bedroom/one-bathroom house with a front yard, and there is also a three-bedroom/one-bathroom house with a backyard,” Mr Hutton noted. “It was a good opportunity for someone to get into the market and be able to collect something in the order of $30,000 a year in income. It is a really good way for a young family, or even someone at the other end of the age spectrum, to keep their cash flow working well throughout the year.”

He added that houses priced under $1.8 million were still particularly strong in the more desirable areas of the northern suburbs.

The dearest unit sold over the weekend was 603/22 Point Street, Pyrmont. It made $2.85 million through agents R&H City Living, while the highest pass-in price achieved by a house was $3.72 million. This was a bid for a sprawling five-bedroom 1960s home on a massive block at 199 Warrimoo Avenue, St Ives Chase, listed by Savills Cordeau Marshall St Ives.

Other stand-out weekend sales of houses included 86 Nicholson Street, Strathfield (sold for $6.6 million through R&W Strathfield); 44-46 Wentworth Street, Randwick (sold for $6,205,000 against a $5.5 million guide price through Phillips Pantzer Donnelley); and a large three-level property with harbour views at 14 Kenneth Street, Longueville. It made $6 million, some $300,000 above reserve, through McGrath Lane Cove.

Some upbeat forecasts for Sydney house prices in the medium term have recently been released.

SQM Research, which has a track record of accurately forecasting price movements in capital city housing markets, predicts that Sydney will go on largely treading water until mid-2018 but that price growth will rebound in the second half of next year.

Others have a pessimistic outlook.

Dr Oliver said Sydneysiders were experiencing a “more bubbly” property market than Melbourne home owners.

“I think we will see a continued slowing in the market and at some point in the next 12 to 18 months we will probably see a 5 to 10 per cent decline in prices,” he said. “I suspect there is more downside to come in Sydney going forward, but it doesn’t necessarily mean the market will be going down in a straight line.

“The big issue is the apartments and the complication in Sydney is that those apartments are going up all over the place. In Melbourne and in Brisbane, apartment development is more concentrated in certain parts of the city.”