More properties languish on the market as sellers won’t cut price hopes

Properties for sale are languishing on the market for longer, new figures show, as buyers pull back and sellers hesitate to accept deep discounts amid the property downturn.

The average number of days on market for a Sydney house reached its highest level in six years in August, while Melbourne houses reached a one-year high, Domain data shows.

Days on market have also ticked up in Brisbane and Perth to reach a three-year high in both cities. The data measures private treaty sales and excludes auctions, which typically run a four-week campaign with a set end date of the auction day.

The typical house now takes 70 days to sell in both Sydney and Melbourne, on Domain data.

The increase comes as property prices have been falling this year amid three interest rate hikes and the chance of more, changes in the May budget to the tax treatment of investment properties, and economic uncertainty.

AMP chief economist Shane Oliver said the data was consistent with the weakness evident in auction clearance rates and with property price falls.

“When you go into a weak property market, it takes longer to sell properties, they sit around for longer, there’s fewer buyers on the ground looking around, and those that are tend to take their time about it,” he said.

“Buyers feel no pressure to finalise a property purchase because they know there’s not a lot of other buyers out there.”

Ray White chief executive of performance and value Thomas McGlynn noted that the total number of homes for sale has been increasing even as the number of new listings coming to the market shrinks, because properties are sitting on the market longer before selling.

“It has taken quite a bit of time for many owners in many markets to adjust to new pricing,” he said.

“There are quite a few buyers in the market wanting to buy, but sellers are not prepared to sell to them at any price, or the price they are putting forward.”

Buyer’s agent Rich Harvey said some homes were taking longer to sell than others, such as properties in a suburb where there is a high volume of homes for sale, or properties that have some type of compromise such as being located on a main road.

“Good properties, really well located, great quality properties still trade at a reasonable cadence – not as fast as they used to,” the chief executive of propertybuyer.com.au said.

He said some buyers see a downturn as a good opportunity to purchase without needing to rush in, while others feel nervous because they think the market will drop further. Some sellers may be open to offers such as vendors of a deceased estate, but other vendors may receive low offers but decide not to move on price.

“As we head into a downturn or a slower market you are naturally going to see days on market blow out.”

Forbes Global Properties director Michael Armstrong, who focuses on Melbourne’s luxury residential market, said some sellers had decided to set their price hopes at a certain level, but would not go below that.

He described their thinking as: “We are choosing patience, rather than capitulating on price.”

He said some in the market were willing to wait for Victoria’s state election in November to be over in the hopes that sentiment would then rise.

He has discussed the potential for longer campaigns with vendors when offering properties for sale. “We have to factor in an elongated time on market,” he said.

Ray White’s McGlynn thought the typical number of days a property sits on the market before selling was likely to reduce somewhat in the future because sellers coming to the market now understand the current conditions.

Sydney’s market in particular had weakened rapidly this winter, and sellers who set a price guide and listed their homes may have found conditions had changed a month later, leaving more properties sitting on the market without buyers, he said.

“We are only just moving through a lot of the property that got caught in that changing market, so these properties, they are selling and being recorded with much greater days on market,” he said.

“Sellers [now] are coming to the market with different price expectations. For the buyers wanting to buy, there are more sellers wanting to sell to them at their new price.”

He said sellers whose property has been sitting on the market for some time could consider its presentation, promotion and price.

“If a property has been on the market for more than 45 days it more often than not does come back to price.”

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