Introduction:

In the dynamic landscape of Australia's housing market, 2023 brings forth intriguing insights. Despite a rise in interest rates, the resilience of the housing market is evident, with fewer homes selling below their asking prices. However, a closer look at PropTrack's data reveals a diverse picture, showcasing the varying extents of price reductions across different capital cities.

Regional Disparities:

According to Paul Ryan, Senior Economist at PropTrack, vendor discounting is most prevalent in Hobart and Brisbane, while Adelaide experiences the least. The data implies a correlation between vendor discounting and recent price growth, suggesting that market conditions remain robust compared to the pre-pandemic era.

Shifts Over Time:

Examining the trajectory, the trend of vendor discounts has seen a decline in 2023. During the housing boom of 2020-21, fewer homes were sold below the asking price, reflecting the surge in demand and rapid price escalation. However, as the market turned in 2022, more homes were sold at reduced prices due to rising interest rates and falling home prices.

Reversal in 2023:

The current year marks a reversal of this trend as market conditions and prices have improved. The share of homes sold below the asking price has significantly decreased, now resting below pre-pandemic levels, indicating a strengthening market.

Changing Discount Dynamics:

Simultaneously, the size of vendor discounts has also diminished. From a median discount of around 5% before the pandemic to a peak of 4% during the pandemic, the discounts increased in 2022. In 2023, the typical vendor discount now falls between these two figures, showcasing a stabilisation in the market.

Regional Perspectives:

Vendor discounting serves as a barometer for relative market conditions. Adelaide, with consistently low rates of discounting, reflects its resilience and continued price growth. In contrast, Hobart, despite starting with the lowest rate, has witnessed a surge in discounting, indicating changing dynamics in the city.

Predictive Nature of Vendor Discounting:

While vendor discounting correlates with recent price changes, it serves more as a reflection of past growth than a predictor of future trends. PropTrack's analysis indicates that the rate of discounting often follows price growth recorded a few months ago.

Conclusion:

In the grand tapestry of Australia's property market, vendor discounting emerges as a valuable indicator of market strength. The current rates and levels of discounts affirm that property market conditions remain robust relative to the pre-pandemic era across the country. As we navigate the evolving landscape, understanding these nuances provides valuable insights for both buyers and sellers.