“Almost every property I’ve bought, I’ve also felt I’ve paid too much,” Cooley said.
AuctionWorks chief auctioneer Jesse Davidson agreed some buyers are worried about the value of their new asset falling.
Bidders are hesitant to raise their hands.Credit:Luis Ascui
“That’s one of the concerns, and typically, buyers are always trying to pick the bottom and pick the top,” Davidson said.
“The truth is no one knows … it’s too hard, it’s too difficult to tell.”
Some potential buyers are interested but cannot commit under strict auction conditions and try to negotiate later, he said. Buyers are requesting conditions such as extended settlements or to pay low 5 per cent deposits, instead of 10 per cent, if they do not have the full amount in cash.
He said although the clearance rate has bounced off its lows, there are low volumes of auctions scheduled for this time of year, which may provide a false sense of the state of the market.
Buyers are uncertain about how to judge fair value in a falling market.Credit:Joe Armao
In Melbourne, Marshall White director John Bongiorno said because buyers are mindful the price of their property will fall, they are saying they are in no hurry to purchase.
“It is one of the catchcries you hear in the marketplace – buyers aren’t in a hurry to buy unless they find the right property at the right price,” Bongiorno said.
“Real estate should always be viewed from a long-term point of view anyway.”
He said buyers are very price-sensitive, although frustrated that there are not more homes for sale to choose from, and many auctions that pass in are selling within about 10 days.
“What we’re seeing more of now is vendors starting to adjust – vendors coming around and saying, ‘I realise that it’s not the price that I probably would have gotten last year,’ but they’re accepting of the adjustment to the market,” he said.
Buyers’ advocate and Wakelin Property Advisory director Jarrod McCabe said purchasers are aware of the falling market and rising mortgage costs, but are reducing budgets rather than quitting their search.
“The concerns that buyers have, and that they’re factoring in, are interest rate movements,” McCabe said.
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“I’m having clients that are adjusting what they’re prepared to pay for property so they’re comfortable with any increase in repayments.
“People are mindful of values reducing but they’re more conscious of what they’ll spend, than not proceeding.”
Other buyers are showing signs of bargain hunting, such as the four bidders at a property quoted at $1.25 million to $1.35 million McCabe attended this weekend. It opened at $1.2 million and passed in at the bottom of the quote range.
“To go to an auction and only bid below the quote price, you’re highly unlikely to buy property,” he said.
He attributed part of the lacklustre auction results to the late stage in the year, as many buyers have purchased already this spring.
Competition is strong for high-quality properties, he said, warning buyers to look at comparable sales results that are as recent as possible to know how much to pay.
“You’ve still got to be prepared to pay fair value, but you don’t need to be paying premiums,” McCabe said.
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