Domain is reporting that Sydney and Melbourne vendors are slashing asking prices amid softening buyer demand and plummeting house prices.
Sydney’s house price discounting has reached its highest level in almost three years, according to Domain, with houses selling for an average discount of 6.7% to their original asking price (representing a $104,000 discount) over the three months to July.
It was the largest discount across the capital cities, and Sydney’s highest discount since September 2019.
In a similar vein, Melbourne vendors are offering their largest discounts since the city’s second COVID-19 lockdown, with homes selling for an average 5.8% below their original listing price (equating to an average $62,000 price cut).
Domain chief of research and economics Dr Nicola Powell says aggressive interest rate rises has slashed the amount that buyers can borrow and spend on property, driving house prices lower:
“I think the data shows that buyers are willing to put in a lower offer than before because buyer depth isn’t as great as it was, and lower offers are now being accepted by vendors”.
The discounting is understandable given the speed at which Sydney and Melbourne house prices are falling.
As illustrated in the next chart derived from CoreLogic’s daily dwelling values index, Sydney’s dwelling values have plummeted by 7%, with most of these losses following the Reserve Bank of Australia’s (RBA) first 0.25% rate hike.
In a similar vein, Melbourne dwelling values have tanked 4.3%, again with losses accelerating following the RBA’s first hike:
Sydney and Melbourne house prices have tanked in response to aggressive rate hikes.
In fact, Sydney’s quarterly price decline (-5.6%) is now running at its fastest pace since the early 1980s, whereas Melbourne’s (-3.6%) is running at its fastest pace since early 2019:
Record-breaking quarterly losses across Sydney.
In response, vendors are being forced to slash asking prices in order to meet the market.
With the RBA expected to continue hiking interest rates over the remainder of the year, house prices across Sydney and Melbourne will continue to plummet, with losses also spreading across the other capital city and regional markets.
