It has been well publicised for a number of months now, that across Australia, property values have softened through 2008 and properties are taking longer to sell. In most areas this is also resulting in increases to the level of discounting (or negotiation) taking place across properties for sale. Between August 2007 and August 2008, only Sydney and Perth recorded a decline in median house values however, all cities have recorded an increase in their average level of discounting. 
Over the same period, only Perth and Canberra have recorded value declines across units, with all cities recording an increase in the average level of vendor discounting. 
These results highlight that it’s not just median price changes which impacts substantially on sale price but also how much discount is required in order to achieve a sale. For vendors, this means that they need reliable and professional advice when setting their listing price in order to set a reasonable and achievable sale price for their property. Vendors also need to understand that some discounting is likely to be required, as properties rarely sell at their original list price. For real estate agents, prices quoted in an appraisal need to be reasonable and reflect current market conditions, as significant discounting prior to achieving a sale can be detrimental to vendor profit. The results also highlight that Australia isn’t a homogeneous market and choosing the right time to sell is so important in order to ensure that the vendor makes maximum profit.
Sydney
Over the year to August 2008, median house values declined by $7,904 and the level of vendor discounting increased by 1.31%. Essentially, if you listed your house at the median value in August 2007 it would have likely sold for $538,359, if you listed for the median value as at August 2008, the property is likely to have sold for $524,475. The net result of the falling value would have resulted in the vendor being $13,884 better off if they sold in August last year. Across Sydney units, median values have increased by $4,690 and vendors would be $416 better off if they sold in August 2008 as opposed to selling in August 2007.
Melbourne
Between 2007 and 2008, median house values in Melbourne have increased by $16,365 however, the level of discounting has increased by 2.01%. If you chose to sell your Melbourne house in August 2008 rather than August 2007 you would be $7,561 better off. Across Melbourne units, the median value increased by $23,617 during the year whilst the level of vendor discounting has increased by 2.67%, given this, a vendor would have been $13,901 better off selling in August 2008 as opposed to selling in August 2007.
Brisbane
Across the 12 months to August 2008, Brisbane’s median house value has increased by $21,915 although, the level of vendor discounting has also increased by 3.64%. Given this, vendors who sold in August 2008 would be $6,328 better off than if they sold at the same time last year. Brisbane’s median unit value rose by $11,966 across the year to August 2008, meanwhile an increase in the level of vendor discounting of 3.09% has meant that a Brisbane vendor selling at the median unit value would have been $2,410 better off selling this year as opposed to selling at the median value last year.
Adelaide
Between August 2007 and August 2008, Adelaide’s median house value has increased by $34,260, whilst the level of vendor discounting has increased by $2,167 or 0.05%. Essentially, if a vendor chose to sell during August 2007 rather than 2008 they would have cost themselves $34,260. Across the unit market, values have risen by a substantial $36,551 and the level of vendor discounting has increased by 0.39%. Unit vendors looking to sell would have been $33,622 better off had they sold in August 2008 as opposed to selling a year ago.
Perth
During the year to August 2008, Perth’s median house value fell by $33,658, the level of vendor discounting increased by 1.95%. If a vendor chose to sell the median valued house during 2007 as opposed to selling during 2008 they would have saved themselves $40,024. Across median units, vendors would have been better off selling during 2007, with the median value decreasing by $10,696 and the level of discounting increasing by 2.13%, resulting in the vendor having made an additional $18,832 on the ultimate selling price if they sold during 2007.
Darwin
Across Darwin during the last 12 months, median house values rose by $37,721 and the level of vendor discounting increased by 0.65%. The net result of these shifts was that a vendor would have made themselves an extra $33,453 if they sold during August this year. Darwin units show a different story, with vendors having lost $14,100 if they sold during 2008, based on an decrease in median value of $8,051 and an increase of 2.46% in the level of vendor discounting.
Canberra
During the last 12 months throughout Canberra, median house values have risen by $14,601 whilst the level of vendor discounting has increased by 3.71%. The net result of these changes is that vendors would have been $2,067 better off had they sold during August 2007. Similarly, unit owners in Canberra would have been better of selling during 2007. The median unit value has decreased by $22,447 and the level of vendor discounting has increased by 2.74%, meaning that sellers would have saved $30,467 had they sold last year.
Newcastle
Newcastle has seen the effect in the last 12 months as well. Prices in Newcastle have dropped by 1.8%, with the median price dropping from $514,000 to $505,000. This price is reflected right through Newcastle, Lake Macquarie and the Hunter Valley as a whole. West Wallsend, Barnsley, Edgeworth, Seahampton, Cameron Park, Holmesville to name a few have all seen the effect. Vendors just need to realise what is happening. Most vendors keep an eye on prices being offered, not what the actual sale price is, which in some cases is over 10% from their asking price.
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Some information provided by RP Data Property Pulse
Posted by No Bull Real Estate 