Clearance rates in the Sydney auction market have dropped below 60 per cent for the first time in three years.
With 1011 auctions scheduled over the weekend, Sydney’s clearance rate dropped to 59.2 per cent, down from 64.4 per cent the weekend before, according to Domain Group.
In some cases, sellers didn’t have any buyers turn up to the auction at all.
Listing agent Matthew Hayson of Cobden & Hayson said there had been a “loss of confidence” in the market, with buyers unwilling to commit to purchasing until they themselves had sold.
“Two months ago they would have said, ‘Stuff it. I’ll buy this and then sell mine’,” he said.
“That’s not happening anymore… open home attendees have halved in the past two months.”
Banks decisions to raise interest rates for investors, followed up by higher interest rates for owner-occupiers over the last three weeks, has dented market confidence.
Buyers are now taking a wait-and-see approach to home buying in fear of potential further rate rises.
Fragile buyer sentiment was also likely knocked by the Reserve Bank’s decision to leave official interest rates on hold at 2.0 per cent for the sixth consecutive month in its November rates announcement, despite signs of a weakening economy.
The fall in confidence is now also affecting sellers, with 112 of the 1011 auctions scheduled on Saturday, withdrawn.
“Buyer and seller confidence has been bruised by unpredictably higher mortgage interest rates, but this is likely to have a relatively short-term effect on the local market,” said Andrew Wilson, senior economist at Domain Group.
“Regardless, the glory days for homeowners of booming prices recorded over the past few years are a fading memory, with price growth likely to be much flatter for the foreseeable future.”