Property sales will slow over summer as sellers are forced to become more realistic: Expert
The comment comes as the auctions market delivered another disappointing result over the weekend, with Sydney's clearance rate falling under 50%, according to Australian Property Monitors. The number of Melbourne properties on the market has continued to exceed 1,000.
David Airey, president of the Real Estate Institute of Australia, says that due to a disappointing Spring period and the upcoming holiday season, sellers looking for a price they haven't yet been able to achieve will rethink their strategy.
"There is no question that if their houses haven't sold, and if they can't afford to keep them, they're more than likely going to give it perhaps another weekend and then think about taking it off the market."
"Then what will happen is that we'll see these sellers putting them fresh on the market in January or February after this two or three week hiatus. Then what we're going to see is that sellers will reflect on how urgently they need to sell and what price they can realistically get."
The comments come after a number of property analysts, mostly led by SQM Research director Louis Christopher, have identified a huge amount of stock on the market over the Spring season. Sellers have been wanting to capitalise on huge growth in prices, but buyers are wary after several interest rate increases.
Airey says that the Summer season will be one of reflection, given that sellers finally realise they won't be getting the prices they've hoped for.
But that having been said, he identifies the Melbourne market has shaping up "pretty well" given the city is recording over 1,000 auctions every weekend.
"I think we're seeing a record number of properties going to auction every market in Melbourne, and to get a 60% clearance rate is still pretty good given there were 931 auctions. In Sydney it's a little bit less exciting, but Melbourne is a resilient market."
"We're still seeing strong median prices in Melbourne, so it's really a case of "when the music stops". We'll need to see what happens in the first couple of months of next year... I think we're going to see more realistic prices being offered."
Real Estate Institute of Victoria chief executive Enzo Raimondo said in a statement that this was the third weekend in a row with over 1,000, with next week set to be even bigger at 1,280.
"It's interesting to note that 2010 will see the most auctions ever held in one year in Melbourne, surpassing the previous high in 1999. This weekend last year saw 913 auctions and a clearance rate of 82%."
Raimondo also noted that the lack of sales "will impact stock levels in 2011", with many properties left unsold. Melbourne recorded a 60% clearance rate, with total sales at $468.43 million and a median price of $741,000.
According to Australian Property Monitors, Sydney only recorded a clearance rate of 49.9%, based on 298 auctions reported. Total sales reached $129.4 million.
In Brisbane, APM recorded a clearance rate of 28% from 24 reported auctions, while Adelaide recorded a 39.5% result based on 51 auctions.