Where Sydney home sellers are dropping price expectations most (2024)

Sydney home sellers are discounting properties by their largest sum in years, as reduced buyer spending power forces them to slash their price expectations.

Sydney houses were discounted by an average of 7.9 per cent in the three months to January, new Domain data shows, the largest discount since the three months to July 2019, when the property market was emerging from its last downturn.

The average discount for Sydney houses has increased every month since its low of 4.9 per cent in the three months to July 2021.

Units were discounted by an average of 7 per cent, the largest price drop since the three months to September 2019. The average is for properties sold via private treaty, and is based on the difference between the advertised price and the sale price.

Domain’s chief of research and economics Dr Nicola Powell said the increase in the level of discounting pointed to a still declining market.

“[Discounting levels] have gone back to the previous downturn. When discounting is rising it means overall prices are falling. Historically, you do tend to find that higher priced areas see greater rates of discounting,” Powell said.

She warned sellers to meet the market, or face a longer sales campaign and larger discount.

“The longer a home sits on the market the deeper the discount. Sellers need to be more open to accepting those [lower] offers.”

The largest discount was in the eastern suburbs, where houses sold for an average of 11.8 per cent below their advertised price, up from 5 per cent the previous year. That would equate to an almost $370,000 discount for a house first advertised at the region’s median house price of $3.13 million.

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It was followed by northern beaches and the Ryde region where the average discount was 10 per cent for both, up from 6.5 per cent and 7.4 per cent, respectively, the previous year.

The largest unit discount was in the Ryde region at 7.7 per cent, up from 5.1 per cent.

Westpac senior economist Matthew Hassan said the high levels of discounting correlated with some of the largest price declines.

“It’s all consistent with the correction … [and] reflects the markets that have seen meaningful declines.”

Hassan said some sellers may have been caught out by the Reserve Bank’s decision to continue to lift interest rates, which was further reducing buyer borrowing power.

“[Price] expectations are going to have to adjust a little bit again with rates still moving in the first half of this year,” he said.

The declining market enabled Redfern buyer Keryn Chisholm to purchase her unit just before Christmas. She bought the two-bedroom apartment before it was listed for sale, for less than the planned advertised price. Units in the city and inner south have been selling at an average discount of 7.3 per cent.

“I wouldn’t have been able to afford it 12 months earlier ... property is still expensive in Sydney, but ... in the inner city area, for me, it was becoming more affordable.”

Given Chisholm planned to buy below her maximum borrowing capacity, her spending power was largely unaffected by rising rates. However, she did have to borrow to her limit — previously about $200,000 higher — leaving her with no wriggle room.

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“I believe the property is worth more than what I paid ... but I certainly couldn’t have paid anymore,” she said “I was willing to max out, and [the sellers] were willing to take a price that was less than they were asking to get a deal done.”

Her buyers’ agent Penny Vandenhurk, of Trelease Associates, had seen an increase in price revisions, and felt about one in six vendors were dropping their expectations mid-campaign. However, she noted some price cuts did not seem genuine, and may have been an attempt to boost buyer interest.

“It’s more concentrated on properties that were sold in the last five years, [the sellers] come to market trying to break even or make a profit, but then they’re having to drop the price,” she said.

Vandenhurk said lower quality properties, or homes with existing tenancies or strata issues, were more likely to see discounting. As were apartments in her market, rather than houses. But it was also dependent on how realistic or not the vendors were.

PPD Real Estate’s Sean Poche said while the selling year started stronger than expected due to limited homes on the market, there was still a disconnect between vendor expectations and buyer spending power.

Poche said adjustments to asking prices were still lagging declines in buyer borrowing power, and warned vendors against holding out too long for a better offer.

“The price the market will give you now will be stronger than anything else you can get in the next 12 to 18 months,” he said.