Vendors warned to give reserves a 'hair cut' as Sydney clearance rate drops

The Sydney weekend auction clearance rate fell below 55 per cent on Saturday as home sellers reduced their reserve prices in some suburbs.

Agents are upping the pressure on vendors to take a “haircut” on the prices they had hoped to achieve.

This is being driven in part by a desire by agents to keep sales transactions ticking over and partly by the borrowing constraints being placed on buyers, which is reducing the sums that many are able to bid. But this is not so much of a problem among buyers who are selling homes in which they have a lot of equity and repurchasing in the same area or downsizing.

On Saturday, price-sensitive buyers bought in some areas at the low end or below listing price guides. This was especially the case when homes were passed in on a vendor bid and a negotiated sale followed.

Sydney’s weekend auction clearance rate was 54.7 per cent from the 267 auctions reported to the Domain Group.

Market watchers say the peak of the five-year boom market in Sydney was autumn last year. Except for the best properties, sales have been on a downward trend since.

Tracey Chandler, a buyer’s agent specialising in the eastern suburbs, said the asking prices for apartments had fallen more sharply than prices for houses.

She said she’d inspected several good-quality apartments in Randwick that were discounted: “Two apartments I have seen would have got an extra $100,000 six months ago. Prices for houses in the eastern suburbs are coming back a little bit. There are not as many buyers as there were, but the market is not a blood bath.”

• Related: The ten most tightly-held suburbs in Sydney
• Related: The cosmopolitan capital of the northern beaches
• Related: Curve ball: Three stunning Sydney homes

Balgowlah-based real estate agent Matt Nicastri, of Cunninghams, said that in his experience the asking prices for some north shore properties had come back by 5 to 8 per cent on mid-2017 prices.

“Buyers are happy to wait for the right one and are not making concessions,” he said.

In recent weeks, when late-reported auction results have been counted, the finalised weekend clearance rate has come in at between 47 and 50 per cent. As well, many agents are pulling properties from auction but then getting transactions across the line in private treaty negotiations, in which agents will wait for a buyer to sell an existing home or assist them to get their loan finance sorted. Other agents are selling $3 million-plus properties without an auction campaign.

It’s very much a market of ups and downs in which good-quality properties can be surprisingly strong.

Belle Property said at the weekend “the particularly high quality properties” were selling well.

One of the company’s auctions for an apartment in Cremorne Point with high-grade views produced an under-the-hammer sale price of $2,440,000. This was $190,000 ahead of the $2,250,000 reserve.

The two-bedroom property, at 18/47-55 Milson Road, drew two registered bidders who both participated.

Belle Neutral Bay co-principal Matthew Smythe said the unit scored a starting offer of $1.9 million and the bidding went up in increments of $25,000 before a downsizing couple from Gordon secured the keys.

“This property has some of the best views you’ll find anywhere on the lower north shore,” he said. “Good-quality properties are still selling very well.”

The top reported sale at the weekend was for a five-bedroom contemporary house at 24 Bellambi Street, Northbridge.

This property made $3,825,000 through LJ Hooker Northbridge. A 1905-built Queen Anne house on 1587 sqm at 31 Trelawney Street, Eastwood, brought home the bacon, too. It fetched $3.1 million through McGrath Epping.