Skyrocketing property prices see sellers raise their price expectations

Vendors emboldened by skyrocketing property prices are quickly shifting their price expectations, with some feeling so bullish they are abandoning their plans to sell now in the hope they’ll fetch top dollar for their homes later this year.

Recently revised forecasts from banks have tipped national house prices to rise by 9 per cent by the end of this year.  

The positive predictions have come amid Australian property values growing at their fastest rate in 17 years over February, record auction clearance rates auction around the country and stunning results thanks to a deluge of buyers in a tight market that sees them aggressively competing for the limited number of homes, all of which is sending prices well above expectations.

Vendors have consequently been quick to cotton on to the rising market, with many re-evaluating their expectations just days before an auction, while other prospective sellers want to list later in the year to achieve stronger results, according to BresicWhitney’s head of sales and chief auctioneer Thomas McGlynn.

“It is moving so rapidly in an upward direction they start thinking should I hold onto my property until the end of the year because I could get more,” Mr McGlynn said.

“A number of auctions in the east were brought forward [due to demand] and price expectations were absolutely blown out of the park,” he said.

Mr McGlynn believed many parts of Sydney’s real estate market had already passed the 2017 peak, with many sellers adjusting reserves in the past fortnight to reflect the fast-moving market.

Sydney has recorded some of the most spectacular auction results. Last Saturday, a North Bondi semi sold for a whopping $6.1 million – $900,000 above reserve.

It was not the first property to exceed vendor expectations. In Coogee, a house sold  $1 million above reserve a couple of weeks ago, as did another house in Cronulla which sold for $1.3 million above its reserve.

Real estate agents in Melbourne — a market that has also seen house prices jump despite a lagged recovery due to repeated lockdowns — have reported that even sellers were more bullish with their expectations following knockout results in February.

Barry Plant’s chief executive, Mike McCarthy, said there was no doubt sellers were emboldened by the rising market.

“Sellers expectations are bullish at the moment, and rightly so,” Mr McCarthy said. “When clearance rates are 80 per cent that’s a hot market, and that means it’s a really strong market.

“As people see and hear good results from their friends or neighbours then their expectations are going up commensurate with that.

Nelson Alexander’s Arch Staver said strong results in recent weeks had seen Melbourne vendors wanting more for their properties.

“Well wanting more is a natural part of a seller’s DNA, isn’t it? Almost always a vendor will get enthusiastic when they see strong results,” Mr Staver said.

In Richmond, a three-bedroom house at 8 Bennett Street sold for $2.12 million – $470,000 above reserve, according to Jellis Craig Richmond and surrounds director Elliot Gill.

SOLD - $2,120,000

8 Bennett Street, Richmond VIC 3121

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Such results were just one of many, Mr Gill said, that were drawing vendors to the market and seeing them set their expectations at a higher level compared with just a few weeks ago.

Agents in every capital city have reported prices well above expectations in recent weeks, which was in turn causing vendors to rethink their goal sale price.

Sellers in Hobart, one the strongest markets in Australia, have seen their price expectations smashed, according to Downtown Property’s Renee Kelly.

“People are paying ridiculous prices to get in,” Ms Kelly said, adding that valuations are outdated within months due to the sheer pace of the market.

In South Hobart, an unconditional cash offer of $851,00 was placed on a property with a guide of $770,000, Ms Kelly said.

She sold another property for $530,000 – $50,000 above expectations. The home last traded 18 months ago for $418,000 with minimal improvements.

In Brisbane, vendors are adjusting their price expectations week to week, said Caroline Brown Property’s Caroline Brown.

“You have to look at what sold last week and that’s what we’re working with. It’s literally what’s selling now,” she said. “One hundred per cent — seller expectations are rising with regards to prices. It’s a rapidly rising market.

“Their expectations are increasing and so they should, because it’s in line with buyer’s prices.”

Perth’s median house prices rose 3 per cent in the past three months of 2020 to $563,214, but even on the west coast, these figures were no longer relevant to vendors who were now setting higher expectations for anything selling in coming weeks.

Shellabear’s Chris Shellabear said house sellers had acted more aggressively in their price expectations than vendors of older apartments because of the strength of the housing market.

But, he warned if expectations ran ahead of the market, it would see vendors sell themselves out of the market.