Sellers are cutting their asking prices as buyers struggle to keep up

PRD chief economist Dr Diaswati Mardiasmo said sellers were forced to lower their expectations as buyers were cautious.

“The buyers are out there … the sellers are realizing that the prices they were asking before were getting attention, but it wasn’t translating into actual sales,” Mardiasmo said.

“That’s why asking prices are coming down because they obviously want their property to sell quickly and in a shorter period of time than it’s taking now … we’re seeing properties sitting on the market longer,” she said, noting that discounts were also increasing.

She said despite the cash rate remaining unchanged on Tuesday, buyers would continue to be cautious as they would face higher mortgage repayments for longer.

Menke White auctioneer Clarence White said Sydney’s property market had been stagnant for several months.

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“Buyers are in a tricky situation. Buyer confidence is very low. The market is gripped by price caution and buyer uncertainty,” White said, adding that many were waiting for a rate cut.

He said many sellers went to auction with excessively high asking prices but were unable to gain traction with buyers.

“If they don’t price it right, there are heavy penalties. This in a way forces agents and sellers to set attractive price guides for properties. Buyers are price-conscious and they’re looking for value.

“It’s a delicate balance … and it’s going to be like this for quite some time. Until rates come down, we’re going to see a pretty delicate and uncertain market.”

Village director and auctioneer Joseph Luppino said the drop in asking prices in Melbourne reflected a broad pullback in the market.

“The market pullback comes down to a serviceability issue. With interest rates effectively tripling, people’s ability to borrow is based on how much they can spend.”

Lupino said that while conditions remain tough for homebuyers with high mortgage repayments, competition is easing.

“They don’t have to face fierce competition. The pressure to trade is a lot less… (the conditions) are definitely more relaxed.”

“They have more choices and they generally face less competition, so that’s easier, but the difficulty they face is, can they meet sellers’ expectations based on their service capabilities?” he said. “It’s a fierce tug-of-war.”