Sydney's cooling real estate market is forcing sellers to lower expectations leading to price fluctuations in real estate value and buyers opting to looking auctions to guarantee bank valuation approval.

It was observed that some sellers were choosing to decrease prices by 6.5 percent to attract sales. The President of the Real Estate Buyers Agents Association, Byron Rose, commented that conservative valuers are striking valuations which are causing sales to fall through.

"Undervaluing properties creates a situation where sellers have to drop prices to match valuations or where buyers have to make up the shortfall if the contract has gone unconditional, leaving them with little room to maneuver,'' Rose told The Sydney Morning Herald. ''The current trend was unfairly occurring more often in private treaty sales rather than with properties sold at auction."

Rose added that he thinks valuers took into consideration possible interest rate hikes when making their valuations. "We aren't buying two or three months down the track - we're buying in today's market and properties should be valued in line with what is occurring at the time of purchase," he added.

Australian Property Monitors reported that the city's provisional weekend clearance rate was 53.4 percent based on 392 auctions that included 750 houses and units. ''Potentially we will see fewer homes being advertised for sale as some vendors decide to withdraw their properties from the market,'' Tim Lawless of RP Data added. ''It compares with 5.5 percent last year.''

This indicates that the city's real estate sector is slowing down. Lawless added: ''Along with slower market conditions, it is anticipated vendor discounting and the average time on the market will continue to increase due to the high volume of stock available for sale accompanied by fewer active buyers.''