What if there aren’t enough home buyers ready to pay what a seller is asking?

Some home owners are deciding not to go ahead with their planned auctions as Melbourne’s property market weakens, instead switching to a private sale process or renting their property out.

The share of properties being withdrawn from auction is edging higher because vendors worry they may not achieve the same prices as they could have late last year, as buyers turn their attention away from listings with asking prices deemed too high, agents say.

But agents often advise sellers to hold their nerve and push ahead to auction day, as buyers may come out of the woodwork who had not previously shown interest, or because an auction can set the benchmark for later negotiations on price. Others may switch to a private sale to attract buyers whose interest is subject to finance approval, such as some first home buyers.

Over the month of June 12.9 per cent of Melbourne auctions listed were withdrawn, Domain data shows, edging up from the 9.5 per cent reported in February.

Across the combined capitals in June, the share of auctions being withdrawn reached its highest level so far this year.

Melbourne’s auction clearance rate was 53.9 per cent last month, its weakest since lockdown, as rising interest rates put downward pressure on property prices and a higher volume of homes for sale gives buyers more choice.

OBrien Real Estate Frankston selling agent Mark Burke said sellers were becoming scared of the cooling market, withdrawing their homes from auction and preferring to sell privately instead.

“Some of them get cold feet because of the rumours they hear [about the market] – they get the shivers,” Burke said.

Even though homes were being withdrawn from auction, they were still selling, he said, as long as the price was reasonable.

“We are selling them, usually within two to four weeks of them being withdrawn – some are even selling within a week for more than we were asking at auction.”

Burke said first home buyers in particular liked to buy in a private sale to ensure they could get finance to cover their offer, or buy with more confidence if they were using a government scheme.

“There are some first home buyers you’ll pick up if you don’t go to auction,” Burke said.

Nelson Alexander Carlton North director Nick West also doesn’t encourage sellers to withdraw their home from auction, believing auctions will test buyers and set a realistic sale price, even if the home is put up for private sale after an auction.

“Typically they sell within a couple of weeks [if withdrawn] but some properties can take longer … really it has to be priced right,” West said.

He said family homes in the area are still very popular and selling well, while those needing renovation are not as sought after.

A hike in building material and renovation costs is holding back those sales, he said.

While some owners preferred to sell via private treaty, other sellers decided to withdraw their properties from the sales market altogether and instead lease them out as rents rise.

“The fact rents are rising is giving some people a fallback option – I wouldn’t say there are heaps though,” he said.

Jellis Craig Port Phillip director and auctioneer Simon Gowling said some vendors withdrew their property from auction to give it extra time on the market to attract more buyers to a future auction.

“Some people, they don’t have a strong motivation to sell if they haven’t bought something else or haven’t moved interstate. They withdraw and put it on the back-burner to see how it goes,” Gowling said.

“Some revert to private sale, which I never recommend,” he said. “Simply because of the amount of times we’ve sold when a buyer turns up that has never seen the house before auction day.”

Gowling said some vendors were waiting for their “unicorn buyer” to make an offer, similar to those being made last year when the market was red-hot.

But he said they could be waiting a long time if they would not negotiate on the price they wanted.

“A property shouldn’t take that long to sell,” he said. “It takes 24 to 48 hours for a buyer to come across the property advertisement and not long after that to look through it.

“If at that point you can’t sell, then it’s not a matter of holding on for longer for the market to improve, because at the moment it’s not going to.”