A Sydney homeowner has been forced to cut a whopping $250,000 from his asking price after his property failed to sell at auction.
The 2.5-bedroom townhouse on a 116m2 block in the exclusive inner-city suburb of Paddington had already been renovated but still had potential to add more value by extending down or up to the roof.
On the market for four weeks before the auction, real estate agent Randal Kemp of Ray White Woollahra-Paddington expected the property to fetch between $2.6 million and $2.7 million.
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But despite 90 potential buyers viewing the property, the Paddington property went up for auction.
Kemp said the property was “a little overpriced compared to initial expectations.”
“We have a number of buyers who still want to buy, it’s just that we have a situation where there are three or four people at an auction and no one is bidding,” he told The New York Times. Australian Financial Review.
“Everyone is looking for value in the market right now. Buyers are very nervous.
You must be aware of what is available in the market and have a price guide in line with where buyers see value.
“Gone are the days of someone paying 10 percent above what was last sold so no one else would buy it.”
The owner was comfortable selling the property for between $2.6 million and $2.65 million, but this was reduced to $2.5 million as a “bottom line” while the house was on the market, he added.
At the auction, there were four registered parties and two of them bid, but the highest bid was only $2.35 million.
The property was sold in a seller’s offer of $2.4 million.
“Having an argument with a seller to say that their house, their property, is devalued 10 to 15 percent in a matter of weeks is a hard pill to swallow,” he said.
“But unfortunately, that’s the reality right now. There have been a number of properties that have not sold and have gone off the market.
“A lot of people have tested the market to see if they can get a price and if they can’t, they’ve chosen to stay or rent the property.”
The property last sold for $1.33 million in October 2013, still netting the owner a hefty profit.
Sydney sees biggest property price declines
Sydney has been one of the hardest hit markets as property prices start to plummet.
Prices fell 0.49% in August in Sydney, but the capital city experienced a dramatic fall particularly in the last six months, according to a PropTrack report published earlier this month.
“All capital city markets are now below their price peaks, with Sydney prices down 0.87 per cent compared to August 2021, making it the only capital city to see a decline. during the year,” said Paul Ryan, author of the report and senior economist at PropTrack.
“This follows persistent price declines since March this year, with prices now 4.8 per cent below their February price peak. Higher interest rates are hitting the regions with the highest price points and Sydney, the most expensive market, has so far seen the biggest price drops.
Overall, Australian house prices have fallen 2.7 per cent nationally since their peak and any gains since the beginning of 2022 have all but disappeared.
A global bank has also warned that Australia’s property market is ripe for a much bigger accident than in other parts of the world as fears of a global recession mount.
Unlike the last global recession in 2008, Australia’s real estate sector is expected to take a bigger hit, while the US will emerge largely unscathed.
Australian properties will fall 18 percent after the bubble bursts, if the report is correct.