Where are vendors having to discount their properties to sell?

The number of sellers dropping their asking price during the COVID-19 pandemic has increased across every capital city except Darwin, new data shows, with Sydney and Melbourne leading the way.

At 14.7 per cent of properties for sale last month in Sydney and 11.5 per cent in Melbourne, that’s nearly three times the percentage discounted at the same time last year in Sydney and almost four times Melbourne’s figure.

But there is a glimmer of good news in the July 2020 numbers just released in new research by Domain: the actual sizes of the price discounts were less than they were in July 2019, and both of the proportions were slightly down from their June peaks.

“So while we’re seeing the asking price of properties decreasing in most capital cities, the level of discounts is lower than it was last year,” said Domain senior research analyst Dr Nicola Powell.

“We’re seeing a broader slowdown in properties, rather than prices tanking, which is good news.

“And I think we’ll continue to see price weakness but the falls to date have been minimal and they’ll stay that way, rather than some of those outrageous predictions we saw at the start of COVID-19 of 30 per cent falls.”

Proportion of listings with discounts 

Source: Domain, July 2020

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In July, the 14.7 per cent of properties for sale in Sydney reduced during their listing period was up from the July 2019 figure of 5.1 per cent, but down from June 2020’s high of 15.2 per cent.

In Melbourne, the 11.5 per cent was well up on July 2019’s 3.1 per cent, but down from June 2020’s 13.4 per cent.

Adelaide was the next highest discount figure at 10.1 per cent, up from the same month last year’s 3.1 per cent, while Perth stood at 10 per cent, up from 5.3 per cent.

Brisbane’s level of discounting came fifth in the nation’s cities at 9.7 per cent, up from 4.4 per cent in July last year, and Canberra was sixth with 8.6 per cent compared to 2019’s 6.3 per cent.

Median discounts on asking prices – National

Source: Domain, July 2020

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The lowest levels of discount were seen in Hobart at 5.4 per cent, up from 2.8 per cent in July 2019, and Darwin at 5 per cent – a figure actually down from 5.5 per cent in July 2019.

“Sydney and Melbourne are showing the greater weakness because they’ve had a greater demand shock from COVID,” said Dr Powell.

“Those two cities are more invested in overseas migration and we’ve obviously seen that cease, they have a higher level of investor activity than elsewhere and they’ve suffered job losses, particularly in Melbourne.

“But at the same time, we’re seeing the discounting concentrated too in the inner-city areas and CBDs, whereas the outer suburbs and regional areas are holding up much better, with lower proportions of sales listings discounted.”

At the same time, the size of the discounts were less in all capital cities – except Canberra and Perth – than they were a year ago.

Darwin saw the biggest fall in the price reduction, from 8.2 per cent in July 2019 to 4.6 per cent in July 2020.

Next came Hobart, down from 6.7 per cent to 4.6 per cent, then Adelaide from 4.6 per cent to 4 per cent.

Sydney’s discount level dropped from 4.7 per cent to 4.3 per cent, Melbourne from 4.2 per cent to 4 per cent and Brisbane from 4.8 per cent to 4.6 per cent.

Perth registered the same sale price decrease of 4.7 per cent from July to July, while Canberra enjoyed a 3.2 per cent discount rate this July as against last year’s 3.4 per cent.

Adelaide, with the moniker for the past couple of years of the quiet achiever of Australian capital city property, rarely suffers wild swings in prices, and is continuing along the path of a modest slowdown of its market.

Perth and Darwin, meanwhile, being both resource-areas, are weathering the storm well, with a pick-up in iron ore and gold prices showing the recovery of resources.

Brisbane tends to be the tale of several cities, with discounting at vastly different levels in different areas.

In the inner city, for example, almost 14 per cent of listings are discounted, whereas in the east it’s only 6.8 per cent, as against the west and north both being around 12 per cent.

“But overall, Brisbane is holding up better than other cities,” said Dr Powell. “And Canberra is holding up even more strongly with only a slight change over the year in the percentage of sales discounted, while Hobart hasn’t changed much at all over the same period of time.”