Sydney auction market feels the pinch as rate hike impacts bidder enthusiasm
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Photo by Federico Abis
The Sydney auction market is experiencing significant shifts following a recent cash rate hike, with a notable decline in bidder competition and an increase in properties being sold prior to auction. This change in the market dynamics presents a mixed bag of opportunities and challenges for both buyers and sellers.
David McMahon, the head of auctions at Ray White NSW, described the current market as an “interesting week,” noting an increase in auction volumes compared to the same period last year. Despite this uptick in activity, McMahon highlighted a shift in campaign strategies, with approximately 40 per cent of properties being sold before auction or converted to private treaty. “Buyer hesitation continues to be evident, and bidder activity remains around 25 per cent down year-on-year, with an average of 2.7 registered bidders and 1.8 active bidders per auction this week,” he said.
McMahon pointed out a significant trend of properties selling prior to auction, which suggests that even with softer on-site competition, vendors can still achieve premium outcomes. “At the same time, it presents a window for well-prepared, finance-approved buyers to secure property ahead of auction day,” he added.
In Sydney’s west, the sale of 4 Fleece Cl, St Clair, provided insight into the budget end of the housing market. The three-bedroom, two-bathroom home sold for $1.1 million, surpassing its $1 million expectations. Listing agent Charlie Stoffers of Ray White United Group observed that buyers have become “a little bit more hesitant” following the rate hikes and rising living costs. However, Stoffers noted that the current landscape offers a unique opportunity for “smart buyers” to make advantageous purchases. “People that are smart are buying now, while other buyers are on the fence,” he said. “The ones that are buying, they’re not having to buy through competition.”
Stoffers contrasted the current market with previous years, where homes could sell at auction for “way over reserve price” with as many as 10-15 registered bidders. “Now, people are getting homes for, if not market value, slightly below,” he explained. “It’s definitely a good market for buyers.”
The vendor of the St Clair property, Brendan Nicol, acknowledged the challenges posed by the current economic climate. “It’s leaving everybody a bit scared of buying and selling,” he remarked, noting that this may have reduced his home’s potential buyer pool. Nicol, who is now looking to upsize in the area, expressed concerns about the impact of interest rate hikes on his future plans. “It just makes things a little bit harder, because now I have to borrow more to achieve what I want,” he said.
In contrast, the Central Coast saw a different scenario at 1 Buckingham Rd, Berkeley Vale, where a fixer-upper home sold under the hammer for $690,000, well below the suburb’s $972,500 median. Listing agent Paul Hills of The Agency Central Coast described the auction, which attracted nine registered bidders, as a “great success.” Hills noted that the market in the Central Coast up to the $1.2 million mark is “extremely buoyant” at the moment, with many buyers coming out of Sydney. The home was purchased by local first home buyers, who were “delighted” to secure their first property. Hills suggested that with a few renovations, the Buckingham Rd home could become the buyers’ own “Buckingham Palace.”
Meanwhile, in the Inner West, a modern twist on the Victorian terrace at 138 Salisbury St, Camperdown, defied the trend by achieving a $3.85 million sale price in an auction brought forward due to strong buyer demand. Auctioneer Damien Cooley encouraged buyers to “lean in” to the current drop in competition across Sydney’s market, noting a decline in registered bidder numbers across his auctions.
In Darlinghurst, two side-by-side units at 235 Darlinghurst Rd were sold for a total of $2.77 million to separate buyers. Units 8 and 9 were part of a deceased estate, with the original owners’ three nieces benefiting from the sale. Unit 8 sold for $877,000, while the larger Unit 9 fetched $1.2 million. Amber Riethmuller of Ray White Touma Taylor reported that the benefactors were “thrilled with the result.”
As Sydney’s auction market navigates the impacts of the recent rate hike, both buyers and sellers are adjusting their strategies to make the most of the evolving landscape. While some see challenges, others find opportunities amid the shifting tides.