One of the lowest auction clearances rate in 10 years, but Sydney's blue-chip areas are holding up

Real estate agents say some property market segments in Sydney have slid backwards after wary buyers dragged down auction clearance rates at the weekend.

The city’s weekend auction clearance rate slumped to 47.8 per cent on Saturday, one of the lowest results in 10 years.

However, only 347 properties were listed for auction sale in metropolitan areas on Saturday. Of these, the results of 198 auctions were reported by agents.

But prices in blue-chip areas tended to hold up as many good-quality homes sold for above or slightly below their guide prices. Dozens of other properties in prized parts of the city were also transacted in off-market deals.

Market watchers say most of the market downturn is in the outer suburbs, especially in Sydney’s west and south, where there are many more sellers than buyers.

Buyer’s agent Peter Kelaher, from PK Property Search & Negotiation, said the prime markets of the city and east, the inner-west and the north shore were faring better than outlying areas.

He said a break-up analysis of weekend clearance rates showed that regional sales results varied greatly.

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“You’ll have a 42 per cent clearance rate down south, 80 per cent on the north shore, 86 per cent on the northern beaches and 82 per cent in the inner west, ” Mr Kelaher said. “It is the other areas that bring down the overall clearance rate.”

While A-grade properties in the inner ring are selling for reasonable prices, this isn’t the case for unrenovated or compromised C and B-grade properties within 15 kilometres of the CBD.

Many larger agents are now declining to list these properties unless vendors scale back their price expectations.

It’s routine in this market for buyers’ agents and prospective buyers to be sent spruiking emails from selling agents with “price reduction” in the subject line.

Data from the Domain Group and the Australian Bureau of Statistics also indicates a general falling trend for Sydney home prices.

Cash-strapped buyers only able to access restricted amounts of loan finance are the driving factor in the market. This is transforming Sydney’s property scene into a “normal” market after the abnormal growth trajectory of 2012 to 2017.

On Saturday, a three-bedroom renovated apartment with panoramic harbour views at 36/114 Spit Road, Mosman struggled to sell through Belle Property.

The property passed in at $1.54 million. The agent then negotiated with the highest bidder to achieve a post-auction transaction for $1.62 million, which was $30,000 shy of the $1.65 million reserve.

As with many auctions in this market, four bidders pre-registered for the unit’s auction but only two parties bid. A starting bid of $1.5 million was followed by just four bids of $10,000 each.

David Benjafield, of Belle Property Neutral Bay, said the lower north shore market was in a correction phase: “Last year, we would have had three or four premium buyers, however at the moment there is often just the one premium buyer in each case. This is evident here, with us having to negotiate from $1,540,000 to $1,620,000.”

In Rozelle, four bidders went after a double-fronted house at 128 Evans Street. The property, with a dated renovation, sold under the hammer before 70 onlookers for $1.9 million in part because of its handy location and the large-for-the-area 240 sqm block-size.

Cobden & Hayson’s Peter Gordon said the property’s guide price was increased from $1.7 million to $1.8 million.

“Two local families with young kids were the strongest bidders,” he said.

Mr Gordon noted that demand for the blue-chip areas was quite solid as long as the properties were priced appropriately: “But if it is a good property with an ambitious price the market will overlook it.”

Some agents are telling would-be vendors that market conditions will get worse before they get better and, therefore, a late-winter or early spring sale is prudent.

Even so, there are signs that many home owners, especially those with a lot of equity in their properties who would like to relocate, are holding fire. Auction listings so far this year are more than 10 per cent down on the same period in 2017. This could send the market pendulum back in sellers’ favour.

Mr Kelaher said vendors were scared to put their properties on the market because they were unsure what price they would get. “They’re holding back and that’s not helping the stock levels,” he said.

The most expensive property sale reported at the weekend was for an apartment at 1A/22 Ross Street, Waverton. The three-bedroom home sold before auction for $3,350,000 through Holmes St Clair.

Meanwhile, a renovated weatherboard house at 87 Renwick Street, Drummoyne, fetched $2.5 million through LJ Hooker Drummoyne/Concord.