A first-time homebuyer couple lost $3,295,000 on a Lane Cove home, outbidding a dozen other home buyers, just days after the biggest one-time interest rate hike in more than two decades.
Thirteen buyers, all owner-occupiers, registered to bid on the three-bedroom property at 11 Howell Avenuewhich sold for $495,000 above reserve price.
It was one of 403 homes due to go under the hammer in Sydney on Saturday, despite the long weekend.
The Lane Cove auctioneer was met with silence for a few moments before the auction opened at $2.4 million, about $200,000 below the guide price of $2.6 million.
Bids rose in varying increments, but not without a fair amount of cajoling from agents on the auction floor, with all four active parties reluctant to raise bids throughout the auction..
Bidding slowed further after the $3 million mark, and two agents fought tooth and nail for every raise of the two remaining bidders. The house eventually sold for $3,295,000 to the first couple of buyers who rent in North Ryde.
The couple, both doctors in their 30s who declined to be named, said they felt they paid a “little bit” for the property. The reserve was $2.8 million.
Sales agent Julia Sikora of McGrath Lane Cove said it was a remarkable result for a market where many homes sell before the auction due to lack of competition. She noted that sellers’ expectations matched buyers’ feedback.
The Reserve Bank’s decision to raise the official exchange rate by 0.5% on Tuesday was “certainly a talking point and buyers are taking it into consideration,” Sikora said.
The house last traded for $1.05 million in 2004, records show the price has more than tripled in 18 years.
Lane Cove’s median home price rose 15.9% to $2.7 million in the year to March 2022, according to data from Domain.
Rising rates weighed on buyer sentiment elsewhere in Sydney, with a newly refurbished three-bedroom terrace in 2 Sutherland St., St. Peter increased to $1,680,000.
Four parties registered to bid on the house and two made offers, but it wasn’t enough. While the terrace failed to sell at auction, it was bought by first-time home buyers 10 minutes after the auction for $1,685,000, after the seller, a developer, reduced his reserve of $1.7 million.
Adrian William’s Adrian Tsvalas said both buyer and seller had to compromise to get the deal done.
“Right now, if you’re a seller and focus on what your property was able to achieve six to nine months ago, you’re likely to get little market engagement,” Tsvalas said.
“[Rising rates] is a talking point and every buyer is talking about it in negotiations right now.”
The home last traded for $1.5 million in February 2020, records show.
The median house price in St Peters rose 22.2% to $1,644,000 in the year to March 2022.
In Dural, another recently renovated house was also passed on. Six parties, including an online buyer, have registered to bid on the five-bedroom home in 25 Jaffa Road, which had a price guide of $2.8 million.
However, only one party made an offer, making an opening bid of $2.5 million, during which the house passed.
It sold just 10 minutes later for a whopping $3.2 million at the active part alone, a Concord family moving from one duplex to another. But even then, the seller had to reduce its reserve by $3.25 million.
Auctioneer Michael Garofolo said rising rates were undoubtedly weighing on the market.
“There’s no doubt about it, interest rates have made people uncertain or uncertain about what they want to do. There’s uncertainty right now and that’s why there’s reluctance to bid first,” Garofolo said.
At Lakemba, a dilapidated deceased estate in 84 Yangoura Road also forwarded a seller’s offer of $800,000.
Four buyers – all aspiring homeowners – registered to bid on the three-bedroom home and started bidding at $750,000.
Bidding reached $780,000 but fell short of the seller’s reserve of $800,000.
Ray White AusBan’s Navid Nawaz said the seller was willing to reduce its reserve to respond to the market, which was hit by the rate move.
“That’s the main reason [buyers are impacted], In fact. People worry about interest rates. If it gets too high, can they hold [the property]?”
In Allambie Heights, a young local family purchased a four-bedroom house in 15 Fishbourne Road for $2.4 million – bang on the reserve.
Matt Nicastri of Cunninghams Real Estate said prices were already down due to rising rates.
The median home price in the suburbs rose 46.5% to $2.71 million in the year to March 2022.
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