Sellers yet to “wake up” to the fact property market has cooled: Experts

Despite falling clearance rates, sellers are still putting properties on the market in the hope they’ll be able to cash in on the dramatic price increases recorded over the past year.

Property experts suggest investors are attempting to make the most of price growth of about 10%. However, as buyers back away due to rising interest rates and colder weather, experts suggest they’ll be lucky to strike as good a deal as they would have earlier this year.

SQM Research founder Louis Christopher says vendors have “not yet woken up to the reality of the new market”.

“There are fewer buyers out there. When houses are selling the best way to sell is at auction. But in a slower market, that’s not the best way because you’re not going to get as good a result.”

“There are listings everywhere. We’re in a situation now where buyers are backing away, but there are still people trying to sell. They’re not going to get the prices they had hoped for, and it’s going to be disappointing for them.”

Christopher says that over the rest of the year, there will be an oversupply of stock in the market, which will put downward pressure on prices.

Additionally, he says property investors wanting to sell should have made their move in the first four months of the year. Now, he warns, they may have missed their chance.

“It’s getting to that point of being a little too late now. The best time to assault the market was earlier in the year. Now, it has become clear that buyers are starting to hold back, and the market will need to respond.”

However, Real Estate Institute of Australia president David Airey says investors need to be cautious. Watching clearance rates alone doesn’t provide a good indicator of the health of the market, he says.

“It’s dangerous just to pick the auction market and take assumptions from that because it’s only a tiny proportion of the total market.”

“Sales are slowing. I think you’ll find that more people will start delaying their property sales until weather and seasonal factors work in their favour.”

But sellers might just be catching up to the trend already.

Real Estate Institute of Victoria chief executive Enzo Raimondo said in a statement this morning that out of 827 auctions on the market, there was a clearance result of only 65%. However, he also noted that there are only 590 auctions expected for next weekend.

“The outlook for July reveals a lower number of homes offered for auction, around 550-600 per weekend and less opportunities for buyers,” he added.

In Sydney, 283 properties were put on the market with a clearance rate of 60%. Total sales value reached $140.2 million.

Brisbane recorded only eight auctions on the weekend with a 35% clearance rate, with sales of $2.5 million, while Adelaide recorded a 50% clearance rate with 16 properties on the market, with sales totalling $8.4 million.