Sydney sellers move to private treaty as buyers stand back
Sydney vendors are changing the way they transact as the property market shifts into a new cycle, but there is good news for buyers.
More Sydney properties are being switched from auction to private treaty as buyer sentiment shifts from fear of missing out to fear of paying too much.
The number of buyers turning up to auctions has shrunk in recent months with less serious bidders waiting to see what happens to property prices before they make their move.
Rising interest rates and talk of a downturn has meant less urgency from buyers and a growing uncertainty from sellers, who are more willing to do the deal behind closed doors rather than proceed to auction.
Ray White data shows out of the 719 Sydney properties scheduled for auction in April, 69.8 per cent did not proceed and were either sold prior, switched to private treaty, withdrawn from market or postponed.
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This differed to Melbourne, where 33.9 per cent of the 762 auctions did not proceed, and Australia, where 44. per cent of the 2,861 auctions did not proceed.
Ray White chief economist Nerida Conisbee said the market had turned more in favour of buyers after the “sellers’ market” of 2021.
“The market has clearly slowed and buyers are holding back,” Ms Conisbee said.
“Clearly the extreme heat we saw last year has come out of the market and, as a result, auction bidding and the prices being achieved at auction have pulled back a little bit from last year.”
“As a result, we do see some sellers deciding to sell prior to auction. We do see some people deciding to move to private sale because the agent advised them to, they may not be in a rush to sell or they feel they may not get as good a result.”
She said comparing the first five months of this year and last showed a 10 per cent jump in the number of vendors switching to private treaty while those postponing an auction had increased from 6.6 per cent to 10.6 per cent.
“That’s the big shift that we’ve seen,” she said.
Ray White NSW chief auctioneer Alex Pattaro said about four buyers on average were registering to bid per auction in Sydney, down from 6.5 this time last year.
The number of “serious” bidders was now about three.
During the September peak, the number of registered bidders per property rose as high as 12.8 while the number of active bidders reached 6.5.
Vendors were responding accordingly by taking the transaction out of a public auction setting.
“There’s no doubt that there is less urgency and less commitment from buyers,” he said.
“Last year, we only saw 8 per cent of properties converting to private treaty. Now we’re seeing as high as 20 per cent converting to private treaty.”
He said media coverage around interest rates and falling property prices had left buyers and sellers questioning the immediate future of the market.
Auctioneer Damien Cooley said he too had noticed a significant drop in the number of registered bidders while serious buyers remained.
Speaking on Mark Bouris’s podcast, Mr Cooley said more vendors were deciding to sell prior to auction.
“A lot more properties are selling before their scheduled date,” he said.
“What that tells me is that there is one good buyer on that property.”
“There’s definitely an appetite to do the deal before the auction if the money is right – or even if the money’s close to being right.”
He said fear of missing out had largely been replaced by fear of paying too much, though good quality properties were still selling well.
“The mood of the buyer has changed in the sense that there is less urgency for them to act,” he said.
“The mood of the vendor is more, ‘let’s try and get our property on the market and get it sold, because if the market does tank, we don’t want to be in a position where either we have to sell or we’ve missed the boat in terms of prices’.”
Mr Pattaro said he believed the market was simply “normalising” after two years of exceptional growth and that this represented good news for buyers.
“I think there are a lot of buyers and sellers out there that feel like it’s (the property market) crashing when it’s actually not – it’s just pulled back to what we feel is a little bit more of a stabilised marketplace,” he said.
“Buyers can pick and choose what they want and they don’t have to feel that rush to get into the market.”
“Also, since property prices have pulled back and levelled out slightly, buyers can take full confidence that they’re not buying completely at the top.”
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