The housing market softened noticeably at the weekend as auction clearance rates fell in both Sydney and Melbourne, leaving many vendors facing the prospect of having to rein in unrealistic price expectations following a surge in listings.
Melbourne buyer’s agent Emma Bloom, of Morrell & Koren, said a pointer to the “definitive shift” in the market was a four-bedroom Victorian home in Hawthorn’s sought-after Scotch Hill precinct, which did not attract a single bid at the weekend.
The property at 4 Berkeley Street had a price guide of $5 million to $5.5 million through Matt Davis and Nicole Gleeson of Kay & Burton.
Competitive bidding at auctions has driven price surges across the country this year, but rising fixed mortgage rates, an increase to the interest rate buffer, the surge in listings and a forecast cooling of house prices have combined to take the heat out of the market.
“There’s more choice, meaning people don’t all have to focus on one property,” Ms Bloom said. “Less demand means less competition and price not being driven quite as hard.”
While she said the “good stuff” was still performing at the top end “behind closed doors”, inquiry levels and the number of people attending open homes had dropped.
Some people are choosing to wait as there is too much heat in the market, Ms Bloom said.
“The biggest issue facing agents are vendors’ expectations. These are through the roof and agents are now having to put out fires,” she said.
Kay & Burton’s Mr Davis confirmed that no bids had been made on the Hawthorn home, but said an offer had been made after the auction and negotiations were under way.
“While this auction fell flat, it’s still a strong market,” he said.
After ANZ forecast the housing market would peak this month or next before moderating in 2022 and falling in 2023, Domain recorded a 71 per cent preliminary clearance rate in Sydney from 1075 auctions.
This would result in a final clearance rate of about 68 per cent, according to AMP Capital chief economist Shane Oliver.
Melbourne, which had its seventh successive week of 1000-plus auctions, recorded a 69 per cent preliminary clearance rate, which Dr Oliver expected to be revised up to 70 per cent, down from last week’s 73 per cent.
“Listings are trending up and clearance rates still strong, but they’re slowing,” Dr Oliver said.
“Expect further slowing due to rising fixed rates, higher [interest rate] buffers, poor affordability and rising listings.”
Echoing the comments of Ms Bloom in Melbourne, Ray White NSW chief auctioneer Alex Pattaro said there had been a noticeable shift in the market this week.
“The market is not where it was two months ago,” Mr Pattaro said. “There’s more stock on the marketplace and buyers have more choice.
“Despite all this, auction day prices are still very strong and typically a reflection of where the market is willing to pay, which is still well above averages from this time last year.
“Of the properties that are passing in, the majority are down to vendors’ expectations exceeding the market.”
Of the 1644 homes taken to auction in Melbourne this week – the third busiest week of the year – CoreLogic reported a preliminary clearance rate of 72.7 per cent. This was down from 74.1 per cent last week (revised down to a final 71.8 per cent).
Sydney’s preliminary clearance rate fell for the seventh week in a row, coming in at 73.4 per cent, compared with 75.1 per cent last week (revised down to 71.5 per cent).
Almost 17 per cent of homes were withdrawn from auction, the highest proportion since July.
By contrast, preliminary auction clearance rates rose across the smaller capital city markets, despite a record number of auctions in Canberra and Adelaide.
Canberra recorded the highest preliminary clearance rate of 85.7 per cent, followed by Brisbane at 82.5 per cent and Adelaide at 79.6 per cent.
Among the notable sales at the weekend was the $9.4 million sale of the lower north shore home of the late Judge Trevor Morling, who famously headed the 1988 royal commission into the wrongful conviction of Lindy and Michael Chamberlain, whose nine-week-old daughter Azaria was killed by a dingo.
Justice Morling passed away in August last year aged 92 (his wife Ruth died in May 2020) and his four-bedroom home at 106 Arabella Street in Longueville was inherited by his three children, Robert, David and Elizabeth.
Offered for sale by Brent Courtney and Sam Lloyd of McGrath, the two-level home overlooks Woodford Bay and has views of the Sydney Harbour Bridge and city skyline.
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/definite-shift-in-the-housing-market-as-listings-surge-20211121-p59anu