Properties taking longer to sell, vendors cutting prices

The time it takes to sell a property has blown out in some parts of Australia, with an increasing number of vendors forced to offer a discount in order to match cooling market conditions.

New data from CoreLogic also shows that the number of properties changing hands across Australia in the 12 months to September fell 5.2 per cent from the year prior, a clear sign that the heat has left the market.

The decline in sales was steepest in regional Australia, at 8.4 per cent, while capital cities recorded a decline of 3.2 per cent.

“The larger sales drop in regional Australia is resulting from multiple factors,” CoreLogic head of research Eliza Owen said.

“Firstly, the decline is likely led by a drop in affordability of regional lifestyle markets, particularly strong declines in regional NSW and Victorian centres.

“Combined with declining affordability in regional centres, and the resumption of economic activity in major cities post COVID-lockdowns, there has been a shift in the push and pull factors from cities to regions which may be impacting sales volumes as well.”

Areas including the Warrnambool and South West region in Victoria, where sales fell by 20 per cent in the 12 months to July 2022; and the Newcastle and the Illawarra regions in NSW, down more than 15 per cent and 18 per cent respectively, led declines in regional locations.

The lifting of restrictions on migration to Australia could be stoking demand in major markets like Sydney and Melbourne, contributing to the smaller decline in sales, Ms Owen added.

The reduced number of sales that are still occurring are taking a longer time to happen, according to the data, with vendors forced to offer steeper discounts on their asking price in order to seal the deal.

The amount of time it takes to sell a property in regional Australia has jumped significantly – the time it took to sell as property in the three months to September was 39 days, up from 26 days the year prior.

The Ballarat region in Victoria experienced one of the largest increases in sale times – the time it takes to offload a property there more than doubling from 15 days in 2021 to 40 days in 2022.

Properties are moving slightly faster in the capital cities, where it took 32 days to sell, though this was still up from 23 days the year prior.

Conversely, discounts are smaller in the regions – up to 4.1 per cent from 3 per cent last year.

The median discount required to secure a sale in the capitals was 4.3 per cent, up from 2.9 per cent the year prior.

The Illawarra region in NSW was home to some of the steepest discounts on dwelling prices in regional Australia, the median discount there jumping from 1.9 per cent in 2021 to 5.6 per cent in 2022.

Ms Owen said that it was typical for properties to take longer to sell in the regions and that slower selling times would likely favour buyers.

“Properties are taking longer to sell and there are deeper discounts being offered on properties now than compared with the height of market conditions in June,” she said.

“This is because buyers face less competition, and may have a lower deposit hurdle on some properties, as well as having the luxury of more time for better decision making, conducting due diligence on properties and having more time to get their finances sorted.”

Despite this, rate hikes and reduced borrowing capacity meant not everything was going buyers’ way, Ms Owen said.

– BY REALESTATEVIEW.COM.AU