The sharp fall in property prices in Sydney, Melbourne will continue in 2023

“We expect property prices to continue falling well into 2023, with further rate hikes likely and the economy slowing. We expect prices to fall about 20 percent from their 2022 peak,” they said.

New research suggests that those looking to sell their property through auction in the New Year should consider the dangers of being overly aggressive with their reserve price.

The research of the four scientists, including Kristle Cortes from the University of NSW, examined house advertisements between 2007 and 2020 and included auctions and private sales.

About a third of all objects were auctioned off. In these cases, 83 percent sold at their first auction, either under hammer or after negotiation with the highest bidder.

The researchers found that homes sold at their first auction saw a price increase of 1.2 percent compared to homes sold privately. But when the property doesn’t sell at auction or there are no bids, there’s a 2.6 percent drop in what they end up getting for their home.

Properties not sold at auction are also 6.6 percentage points more likely than just above a round number, such as $650,000, to sell compared to private contract sales.

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According to the researchers, the fact that a property doesn’t sell at its first auction leaves a “stink” that bidders pick up at subsequent auctions.

“Failures at auctions create an embarrassing but temporary ‘bad smell’ around the property itself,” they noted.

“Stigma, the vague feeling that something might be wrong with the property, may explain our results.”

The new year also brings legislative changes that could bring more properties onto the market.

Starting tomorrow, more older Australians looking to downsize will be able to put proceeds from the sale of their home into retirement.

Treasurer Jim Chalmers says changes to downsizing rules for older Australians will boost retirement balances and help people get into new homes.

Treasurer Jim Chalmers says changes to downsizing rules for older Australians will boost retirement balances and help people get into new homes.Credit:Janie Barrett

The funding age for the federal downsizer program will be lowered from 60 to 55. Under the program, people can deposit up to $300,000 from the sale of the family home into their super account. Couples can invest $600,000 in Super together, avoiding the usual Super deposit caps and earning a lower tax rate.

You must have owned the home for at least 10 years to qualify.

Chalmers said the change would give a great boost and help to the housing market.

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“The expansion of the downsizer program will allow more Australians to use the equity they have built up in their homes for retirement,” he said.

“The downsizer program has the added benefit of freeing up housing stock for young families and individuals looking to buy a home.”

Also starting in the new year are higher penalties for foreigners violating foreign investment laws that affect home ownership.

The penalties will double and are expected to generate an additional $2.3 million in revenue over the next three and a half years.

Break through the noise of federal politics with news, perspective and expert analysis from Jacqueline Maley. Subscribers can sign up for our weekly Inside Politics newsletter here.

https://www.smh.com.au/property/news/the-stench-of-auction-failure-as-property-prices-face-further-falls-20221230-p5c9ey.html?ref=rss&utm_medium=rss&utm_source=rss_property The sharp fall in property prices in Sydney, Melbourne will continue in 2023

Brian Lowry

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