How nervous home owners are facing a slumping property market

Nervous home sellers aiming to get the upper hand in a buyer’s market are starting to avoid holding auctions and choose private sale methods instead.

More property owners are selling than usual for this time of year as investors offload assets, interest rates take a toll, and home owners take advantage of a slower market to upgrade, but private treaty sales are coming into favour for sellers.

A public auction allows the whole neighbourhood to see what buyers think a property is worth in a transparent process. Offers made to a vendor in a private sale process can remain private, which appeals to some sellers, although the risk is a lack of urgency and a lack of competitive pressure.

There were 10.3 per cent more properties for sale nationally in January than the same time last year, SQM Research figures show. Sydney was up 19 per cent and Melbourne was up 15.9 per cent.

But SQM Research founder Louis Christopher said the rise in listings appeared to be concentrated in the private treaty market, because auction listings for the first two weekends in February were 7 per cent lower than the same time last year – Sydney is down 9.5 per cent and Melbourne is down 4.6 per cent.

“It appears as though proportionally auction activity as a percentage of total listings is down,” he said.

“Normally in slower markets, or markets where vendors start to lose some confidence, they’ll generally tend to move to list towards a private treaty market rather than the auction market.”

He emphasised that it is still early days for 2025, but was not surprised to see the trend after the market slowed late last year under the pressure of ongoing high interest rates.

“The start of the year does suggest a little bit of loss of confidence by vendors.”

Most of the owners on the market now decided to sell before recent upbeat inflation data pointed to a likely interest rate that could come as soon as this month, or otherwise by May.

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Some owners who decided to sell months ago still have not found buyers, which he said also affected vendor confidence.

There are 20.7 per cent more stale listings – homes that have been sitting on the market for more than 180 days – in Sydney than this time last year and 19.2 per cent more in Melbourne.

“That does suggest an ongoing decline in overall participation,” he said. “So potentially less buyers out there, more than anything else.”

Buyer’s agent Michelle May of the eponymous agency has noticed some Sydney sellers shifting away from auctions, although she said this was mostly among apartments rather than houses.

She said the demand-supply balance was different for apartments and family homes, especially in high density areas such as Waterloo or Zetland where buyers have their pick of apartments for sale. There is less supply of inner-suburban houses relative to demand, she said.

She had noticed other indications of a slow market to start the year such as thinly attended open for inspections.

“I’ve definitely seen less people at opens but we’re just coming out of the school holidays,” she said. “The proof will be in the pudding from now on.”

Buyer’s agent Nicole Jacobs, managing director at Cohen Handler in Victoria, has also noticed some sellers reluctant to go to auction in a buyer’s market.

“I definitely see more properties now that are private treaty and expressions of interest,” she said. “They’re less transparent for the buyer and more in favour of the vendor and it alleviates a bit of stress about auction day.

“Vendors are trying to protect their assets because they’re not on one day having a very public showing of what the market thinks it’s worth.”

She said selling a home could be quite emotional for an owner-occupier, and some might take a lack of buyer interest personally.

This weekend just gone, some open for inspections were busy – especially in the $2 million to $5 million range – and others were empty, including in the ultra-prestige segment.

But she added that the first big auction weekend is the end of February, which will offer a better idea of the auction market’s performance.

She felt that interest rates are still looming large in market participants’ minds, and any cut was likely to increase confidence and competition.

“Everyone would love one [interest rate cut] just to spark a bit more excitement and confidence in the market.”