The gap between buyer and seller expectations is widening, according to new research.
The latest RP Data weekly property pulse found auction activity has dropped considerably in the last six months, suggesting vendors may still have higher price expectations that what buyers are prepared to pay.
For the year to date, the weighted average auction clearance rates on a week-to-week basis were 48.1 per cent.
In comparison, during the 2010 calendar year, the average auction clearance rate was recorded at 60.4 per cent and in 2009 when the market was particularly strong, it was 69.2 per cent.
The highest clearance rate recorded since the start of 2009 was 79.7 per cent during the week of 13 September 2009 which is also when market conditions were at their peak and just prior to the first increase in official interest rates by the RBA.
RP Data research analyst Cameron Kusher said with auction clearance rates now averaging below 50 per cent, it would appear there is a growing disconnect between buyers and sellers.
“The significant weakening of clearance rates is reflective of the slowdown in housing market conditions. Clearance rates have eased, property value growth has flat-lined and fallen in some capital cities, sales volumes have dropped and time on market and vendor discounting levels have increased,” Mr Kusher said.
“The first hint of these weaker conditions became evident in October 2009 when the Reserve Bank began lifting interest rates. This trend has become more apparent over time.”
According to Mr Kusher, many vendors believe an auction campaign will generally achieve greater exposure than a private treaty sale due to the intensive marketing campaign where the property up for auction is heavily advertised for the month leading up to the auction.