Buyers in the driver’s seat as owners offer discounts

Sunday Herald Sun | November 13, 2011
http://www.news.com.au/money/buyers-in-the-drivers-seat-as-owners-offer-discounts/story-e6frfmci-1226193644092

With Melbourne’s property market in a deep freeze, vendors are dropping their asking price by as much as 25 per cent to wrap up a sale.

As the level of property sales hits it lowest level in more than a decade, home owners have responded, with some slashing hundreds of thousands of dollars from their asking price to attract a buyer.

Vendor discounting – the price between what a property is initially advertised for and its final sale price – has risen sharply over the past six months, figures from property research firm RP Data show.

In May, the largest vendor discounts were being recorded in Dandenong, with sellers dropping their asking prices by an average of 10.1 per cent so they could clinch a deal.

That has now blown out to about 25 per cent for units in Broadmeadows and 19 per cent for units in Vermont.

Melbourne’s historic discount level is about 6 per cent.

The vendor discount does not mean property prices in that particular suburb are falling – several suburbs in the top 10, including Vermont, Macleod and Somers have recorded price increases over the past 12 months.

It does, however, show that vendors in these areas are being forced to retreat a long way from their dream figure if they are serious about wrapping up a sale.

It is also a reminder – if any was needed – that buyers are holding most of the cards when it comes to wrapping up a deal, a shift most real estate professionals say won’t change until early next year.

Barry Plant Glenroy director Angelo Nestor said it was no secret prices had eased in the Broadmeadows area over the past year.

“Buyers have definitely been driving a hard bargain,” he said.

“The vendors who want to sell are meeting the market.

“For a while they weren’t but they are being pretty realistic these days.”

Mr Nestor said inquiries, particularly from first-home buyers, had picked up since the Melbourne Cup day interest rate cut and house hunters should be careful about trying to pick the bottom of the market.

“I would say to those buyers sitting on the fence that if you are waiting for the market to bottom out be careful because by the time you know it has it will be too late,” he said.

“The market here has always been a great starting point for people entering the property market and the number of phone calls since the rate cut has risen.”

Other suburbs offering heavy vendor discounts include Park Orchards (17.7 per cent), Fingal (16.7 per cent), Macleod (13.7 per cent), Toorak (7.7 per cent), Mulgrave (13.5 per cent), Essendon North (13.2 per cent), Hawthorn (13 per cent) and Somers on the Mornington Peninsula(12.9 per cent).

Country areas are also seeing large price reductions.

Sea Lake is recording vendor discounts of about 20 per cent, Ouyen 17.6 per cent, Charlton 17. 2 per cent and Myrtleford 15.1 per cent.

Brad Teal Real Estate director Brad Teal said the Essendon market had taken a battering over the past year, but had rallied in the past quarter.

“Buyers can very much sense that they are in the driver’s seat for the first time in a long time, but they have gone too far south in some of their offers,” Mr Teal said. “We are getting a lot of vendors saying if they can’t get their price they will hold off and wait for the market to improve.

“Buyers need to be a little more realistic and learn to value the discounts that are available.”

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