Yahoo Finance Sydney auction withdrawals highest in 10 years
News that the property downturn might be nearing its end is music to Sydney property vendors’ ears, as data shows they’ve been lacking confidence in their auctions.
An average of 17 per cent of Sydney properties have been withdrawn prior to auction over the last two years - a rate that increased to almost one-third in the quarter ending December last year, Domain has reported.
Domain’s research analyst, Eliza Owen, told Yahoo Finance that the three months to January this year saw a peak in those auction withdrawal rates - which are at a decade-high.
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“The portion of Sydney properties withdrawn from auction was about 30 per cent over the quarter,” she said.
In some parts of Sydney, like the Central Coast and the northern beaches, the withdrawal rate jumped up to a whopping 40 per cent.
In Melbourne though, auction withdrawal rates were much lower, with only 10 per cent of properties withdrawn during that same time frame.
Why are auctions being withdrawn?
Owen told Yahoo Finance that when property prices are falling, more sellers become worried that they’re not going to get the price they want for their properties.
“And, I think agents who are marketing these properties are also concerned that they won’t get sufficient buyer turnout, and so we see a higher instance of properties withdrawn.”
Century21 Dee Why principal, John Lippits, told Domain the rise in withdrawal rates on the upper north shore and northern beaches was due to agents not being upfront with price guides.
“Buyers are coming with false expectations,” he told Domain. “That can be due to the agents not giving the right guide price; people are turning up to auctions and hoping to get a bargain.”
Owen said the northern beaches and the north shore were notorious for properties withdrawn before auctions, given there’s a smaller pool of people who might buy in those areas.
“It’s a niche market - more likely to be owner-occupiers or upsizers,” she said. “A more specific pool of prospective buyers might mean that more properties get withdrawn before auction.”
Are withdrawal rates still on the rise?
Domain said the most recent data showed withdrawal rates dropped slightly, with last Saturday 15 June posting the highest auction clearance rate (71 per cent) since January last year.
“Now that we’re seeing signs that the downturn is softening, we’re also seeing the portion of properties withdrawn from auction is falling as well,” Owen said.
“The latest data we have suggests 21 per cent of properties were withdrawn from auction in Sydney, and 8 per cent withdrawn in Melbourne.”
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