by Michael Bleby
Falling auction clearance numbers and nervous vendors are driving growth in the number of off-market sales in the residential markets of Australia's largest cities.
Last month, Sydney buyers agent Lauren Goudy purchased a two-bedroom apartment in Sydney's Darlinghurst for $2,154,000. The unit at 707/320 Liverpool Road was due to go to auction but three days before the agent cancelled the auction and asked buyers to make offers.
"A number of properties are being 'pulled' before the auction day and then the selling agent will then try to negotiate with the buyer they have at the right level, rather than taking the property to auction and passing-in, or revealing to that one buyer that there is no other interest at their same level," Ms Goudy said.
The trend for off-market sales campaigns that was previously the domain of high-end properties has gone mainstream and is strongest in the market with the biggest hangover. Sydney home values are down 4.1 per cent from a year ago, CoreLogic figures show.
Winter is coming and auctions are slowing as more vendors go
"In the current climate there are sellers potentially unsure and uncertain as to whether their property will sell or not," said Liane Fletcher, a co-founder of off-market listings site Property Whispers.
"They do stop and think 'Should I spend the money on advertising right now, to maybe not get a sale?'"
Sydney-based Property Whispers doesn't display properties, but matches potential buyers with listings on its database that match the requirements they specify and emails details of those listings to buyers. It doesn't track how many of those matches lead to sales.
While its database is new – it is only a year old – Sydney suburbs account for 13 of the top 20 by number of off-market listings. Annandale in the inner city, tops the list, with Bondi, Cremorne, Dee Why, Dover Heights, Hurstville, Kellyville, Kogarah, Mosman, Rose Bay, St Ives, Vaucluse and Waterloo also featuring. Ms Fletcher declined to disclose listing volumes.
In Melbourne, where home values are down 2.2 per cent for the year to date, the biggest suburb for off-market listings is the south-eastern suburb of Berwick, while central Melbourne and St Kilda also feature on the list.
Rising property listings – which SQM Research figures show are currently up 10.3 per cent in Melbourne from a year earlier to 33,169 and a whopping 29.2 per cent higher in Sydney at 33,852 – are also adding to the competition that is making vendors cautious.
Buyers are holding back at auctions. RT Edgar Toorak agent Holly Gillham on Saturday sold a townhouse for $1,885,000 million after it was passed in on just one bid of $1.8 million.
While the sale of the 6/33 Albany Road townhouse was within the stated price guide of $1.8 million to $1.98 million, Ms Gillham said she had three interested parties and it was surprising the bidding wasn't stronger.
"There was a gentleman who kicked himself that he didn't bid," she said.
The onset of winter may prompt more vendors to go off-market.
"We would never run a campaign through winter," Ms Gillham said. "It's in no one's interest. We're booking auctions for August and September."