Cautious buyers drag down Sydney auction clearance rate – The Australian Financial Review

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A three-bedroom house in Sydney’s lower north shore and a four-bedroom house in the city’s west beat their auction reserves by $100,000 over the weekend, but these relatively strong results are becoming the exceptions, not the norm, property experts say.
Thomas McGlynn, chief executive of real estate agency BresicWhitney, said the prospect of interest rates staying high has spooked many buyers, making them less likely to spend above their budgets.
Preliminary clearance rates edged slightly lower in Sydney over the weekend as buyers become increasingly cautious, according to agents. Nikki Short
“It’s certainly a lot more evident now than at the start of the year, when there’s a lot of optimism about an imminent rate cut,” he said.
“Over the past couple of weekends, at all price points in Sydney, I’ve noticed buyers’ distinct lack of appetite to stretch their budgets.
“Bidders often start strong at auctions, but stop once they hit their limits, unlike late last year when people were quite happy to go above it.”
The three-bedroom house at 7 Lyndhurst Street, Gladesville, was sold for $2.3 million, which was $100,000 higher than the reserve.
The property attracted 11 registered bidders and five active bidders according to Mr McGlynn, whose agency sold the property.
This three-bedroom house at 7 Lyndhurst Street, Gladesville, was sold for $2.3 million, which was $100,000 above the reserve. 
“This shows there’s a big demand for entry-level freestanding houses like this, but this result is becoming an exception, not the norm,” he said.
“Bidders are reluctant to bid above their budgets because they are a lot more conscious of affordability and serviceability of their mortgages.
“I think that’s the new normal in terms of prices that are being achieved, which are still quite strong, but not runaway.”
A four-bedroom house at 139 Adelaide Street, St Marys, 45 kilometres west of Sydney’s CBD, also beat the reserve by $110,000 after selling for $1.96 million over the weekend, according to Ray White.
Tim Lawless, CoreLogic research director, said there had been a subtle easing in clearance rates in Sydney over the past four weeks, compared to the start of the year.
Over the weekend alone, preliminary auction clearance rates in the city slipped to 73.8 per cent, down from 74.3 per cent in the previous week.
“Clearance rates have broadly slowed compared to the middle of last year, but are still higher than the long-term average, and are still conducive to further price increases, which says to me that prices are likely to continue rising, although not as strongly as last year,” Mr Lawless said.
Louis Christopher, SQM Research director, said while Sydney had performed better than his earlier forecast, there were signs the market had turned.
“We’ve seen some weakness in the housing market and I suspect that the strength that we saw at the beginning of the year is just not there any more,” he said.
“I think a number of would-be buyers were quite disappointed that the rate cut hasn’t materialised, so they may have decided to wait on the sidelines just to see what the Reserve Bank will do.
“In the meantime, we’ve seen a rise in listings in Sydney, so the market has been coming back to being reasonably supplied once more, which also eases upward pressure on prices.”
Melbourne’s early results showed a slight lift to 72.7 per cent, up from 70.8 per cent in the week earlier.
Nationally, clearance rates increased by 1.7 percentage points to 74.4 per cent, bolstered by stronger results of 86.5 per cent and 75 per cent in Adelaide and Brisbane respectively.
“Adelaide and Brisbane are continuing to show a strong run in their auction markets, although they have smaller portions of properties taken to auction, so they can be quite volatile,” Mr Lawless said.
“But if you read through the noise, they are holding well above the long-term average clearance rates, which is reflective of the strong conditions we’re seeing in those markets.”
CoreLogic’s daily home value index showed Perth gained 1.8 per cent in the past four weeks, Adelaide was up 1.3 per cent and Brisbane 0.8 per cent. Sydney lifted by 0.4 per cent, while Melbourne fell slightly by 0.1 per cent.
There were 1888 auctions over the weekend, the lowest volume since the week ending February 11. Next week about 1900 properties are scheduled to go under the hammer, according to CoreLogic.
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