Auction
A sign stands at the front of a house after it was sold at an auction in the Sydney suburb of Waverley in Australia May 28, 2015. Australia and New Zealand are looking outside traditional monetary policy to do the same thing -- cool red-hot housing markets in their biggest cites without hurting borrowers, banks and their economies -- but they are following different paths. The success, or not, of these experiments could prove critical to the outlook for interest rates in both countries, while offering a guide to other rich nations on how to manage housing booms when the broader economy still needs support. Reuters/David Gray

On the first auction day of October, Sydney vendors’ expectations have come crashing down as they had to drop their prices much below their expectations. Although more than a thousand houses were hammered in the auction, the dropping of prices has hit them hard.

According to the Domain Group, which had collected data from 687 houses, the auction clearance rate touched 70 percent, a little more than last weekend’s rate (69.9 percent). “Clearly sellers are more motivated to sell given the weakening market over recent months,” Dr Andrew Wilson, a senior economist at the Domain Group said.

Auctioneer Ricky Briggs of Briggs Auction Services, who sold five out of 10 homes on Saturday, said that houses were auctioned beyond the reserved price and bidding is also facing a slowdown in the recent months. “Vendors’ expectations are quite high and aren’t really meeting the eye of the market,” he said, adding that the agents had hoped of a higher number of buyers this weekend.

“Reserves were being met a few weeks ago but buyers’ confidence has dropped as the market is steadying,” Briggs added.

Meanwhile, the number of potential buyers has also decreased since last few months.

Auctioneer Will Hampson, of My Auctioneer, was of the same opinion but acknowledged that buyers were available to buy houses at a more realistic price. “Interest rates are still the same, there’s just not as much heat in the market now,” he said.

Damien Cooley, of Cooley Auctions, conceded that vendors or agents need to set realistic prices in order to sell their houses this year. “We are telling owners not to hold out for that extra AU$5000 to AU$10,000 – they need to get it done before Christmas,” he added.

However, agent Justin Ferguson, from Justin Ferguson Property Specialists Cammeray, said that the lending rules set by the banks were making it difficult for agents to get over the reserve. He also noted that the demand for properties is still high.

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