Slowest start to Spring since 2012, as Sydney buyers ‘wedge’ the market

Picky buyers bid up the prices of high-quality properties and steered clear of many other houses and apartments as Sydney’s spring auction market kicked off on the weekend.

For the third consecutive week the city recorded an auction clearance rate below 70 per cent. The Domain Group posted a clearance rate of 67.1 per cent from 438 reported auctions held on Saturday, which the group’s chief economist Andrew Wilson said was the lowest clearance rate recorded on the first weekend of spring in five years.

The success rate for auctions is easing because property punters are increasingly “wedging” the market by focusing their attention on good locations and A-grade properties and avoiding lesser-quality houses and apartments. There’s also less cheap money energy in the market because there hasn’t been a cut to official interest rates in 12 months and the big banks are independently lifting borrowing rates for some buyers.

But this doesn’t mean lower prices are being paid for the sought-after properties. Far from it – renovated “move-straight-in” homes and well-located land-only properties were hotly contested on Saturday, with many fetching strong prices.

“Prices are still strong,” said Stone Real Estate Seaforth principal Phillip Wright. “The difference now is that a compromised property is not getting as much as the one that everyone wants and desires, and that is taking the market back to a real marketplace.”

On Saturday, Stone sold a well-appointed five-bedroom house at 11 Dobroyd Road, Balgowlah Heights. With a guide price of $2.9 million, the home drew five registered bidders and even though only two of them actually bid, it was enough to push the property to an under-the-hammer sale price of $3.25 million.

Mr Wright said buyers were prepared to pay more “if it’s the right property”, adding that the sales environment had shifted gears from a rising market to more stable conditions.

Others see the same trends.

“Properties have either got nobody on them or everybody,” said eastern-suburbs-based buyer’s agent Tracey Chandler. “I go to one property and the agents are begging me (to help secure a sale). I go to another property and the agents are smashing it, whereas a year ago buyers were full on to every property, no matter what it was.”

• Related: Click here for Saturday’s auction results
• Related: Click here for the Market Snapshot
• Related: North Sydney cottage sells for $2.6m

Quality means different things to different people. It can be perceived as a fully renovated property that provides a turn-key solution for a buyer. But unrenovated homes and properties that may have been renovated 20 or 30 years ago, are also highly sought after, particularly if they are well-located and have sound structural “bones”.

The most expensive auction sale reported in Sydney, and also nationally, to the Domain Group on Saturday was a dated four-bedroom house at 73 Newton Road, Strathfield. Devine Real Estate Strathfield sold the deceased estate property for $5.5 million after declaring it on the market at $4.9 million. Five bidders competed for the keys before 100 onlookers.

The big attraction here was the 1416 square metres of land up for grabs and the 20-metre wide frontage.

Devine’s Joe Campisi said the property, offered for sale for the first time in 88 years, was one of few remaining blocks in Strathfield with enough space for a tennis court. The new owners planned to rent out the existing house for a year and then construct a new single residence on the site, he added.

Meanwhile In Sydney’s west, a crowd gathered out the front of a three-bedroom home in Newington, as bidding for 21 Henricks Avenue quickly shot past the $1.6 million reserve – selling for $1.7 million in five minutes.

But other properties failed to fire at auction. A large 1920s house at 404 Malabar Road, Maroubra, offered by The Agency, attracted only one registered bidder who offered $2.6 million.

Selling agent Thomas Heath said the 493-square-metre property with a pool was passed in on a vendor bid of $2.7 million.

Of the 438 reported auctions on Saturday, 98 properties were passed in.

Buyer’s agent Chris Gray, from Your Empire, said buyers willing to compromise and chase properties that ticked six out of seven of their preference boxes rather than nine or 10, would see greater opportunities in the months ahead.   

“But if you are after the classic property that ticks all the boxes – it’s on the right street, it’s got parking, it’s in the right area at the right price and it is well-maintained – then it is not really going to make any difference to you whether the clearance rates are at 80 per cent or 60 per cent,” he said. “The price is going to be the same and there is still going to be no stock of that kind of property, and when there is stock there is going to be lots of competition.”

Sydney is a city divided in its real estate sales performance. There’s a pronounced disparity in regional results with inner suburban areas producing significantly higher results compared to the middle and outer suburbs.  

But Dr Wilson said clearance rates in higher-priced inner Sydney regions were now running consistently lower than the sales results seen in autumn and the early-winter market.  

He said Canterbury Bankstown was a surprise regional leader on Saturday with a robust clearance rate of 75.8 per cent. This region was followed by the city and east with 74.6 per cent, the south with 74.4 per cent, the northern beaches with 73.5 per cent, the upper north shore with 68.7 per cent and the inner west at 67.7 per cent.

The lower north was markedly down with a clearance rate of just 63.3 per cent. Meanwhile, the west scored 60 per cent, the central coast 58.3 per cent, the north west 53.6 per cent and the south west 45.5 per cent.