Vendor discount is calculated by measuring the percentage difference between the initially advertised price of a property and the contract price of the property. Nationally, around 75% of properties sold by private treaty over the three months to January 2019 sold for less than the original list price highlighting how prevalent discounting is. Vendor discounting is reported as a negative percentage highlighting the drop in price, with a lower figure representing a larger discount. The charts show the level of vendor discounting over time and the median discount over the past decade.
Over the past three months, the median vendor discount nationally was recorded at -5.7% which was not only the greatest level of discounting since August 2012, it was substantially larger than the -4.6% median discount a year earlier. The widening gap between seller and buyer price expectations reflects the fact there are fewer active buyers in the market and as a result vendors that are serious about selling may need to make some sizeable price adjustments in order to sell.
Combined capital cities – the median vendor discount is recorded at -6.3% which is the most significant discount since January 2009. In January 2018, discount levels were much less significant at -4.7% which highlights just how quickly housing market conditions have deteriorated in 12 months with discounting levels mirroring those seen during the financial crisis.
Combined regional markets – the deterioration in selling conditions has not been as substantial as it has been across the capital cities. Discounting levels are currently recorded at -5.2% compared to -4.5% a year ago. The worsening in discounting reflects the fact that dwelling values have begun falling in regional markets over recent months.
Sydney – properties in Sydney are seeing more substantial discounts now than they were during the financial crisis. The median vendor discount is currently -7.5% which has weakened from -4.8% a year ago. The last time it was larger than it is currently was all the way back in February 2006. The rate of deterioration of selling conditions in Sydney has been rapid.
Regional NSW – the level of vendor discounting has weakened from -4.0% a year ago to -4.9% currently. As values have started to fall in regional NSW it is likely that the level of discounting will increase further.
Melbourne – vendor discounting has become more significant over the past year as dwelling values have fallen rapidly. A year ago, vendor discounting was -3.6%, having fallen to -7.0% currently which is its weakest level on record. Like Sydney, this highlights just how weak housing market conditions are and how few buyers there are.
Regional Vic – vendor discounting has fallen to -4.3% at January 2019, down from -3.8% a year earlier. Although discounting levels have deteriorated over the past year, they remain much healthier than they’ve been over recent years.
Brisbane – while vendor discounting levels have weakened over the past year, discounting levels have been relatively mild over recent years especially given very little value growth in Brisbane. As at January 2019, vendor discounting was recorded at -5.3% compared to -4.4% a year earlier. The -5.3% was the weakest level of discounting since February 2013.
Regional Qld – as overall housing conditions have deteriorated over the past year, discounting levels have become more substantial. A year ago, discounting levels were -5.3% having fallen to -6.7% currently, the weakest they’ve been since February 2013.
Adelaide – discounting levels have nudged slightly lower over the past 12 months. As at January 2019, the median vendor discount was -5.3%, which is a more substantial discount than the -4.8% a year ago. The rate of discounting remains mild across Adelaide.
Regional SA – the level of discounting has fallen over the past year. A year ago vendor discounting was recorded at -6.0% and over the past year it has worsened to -6.8%.
Perth – despite the ongoing weak housing market conditions over recent years, there has actually been an improvement in discounting levels over the past year. 12 months ago, median vendor discounts were -6.5% compared to a slightly improved -6.4% currently
Regional WA – while discounting has improved in Perth it has weakened over the past year in regional WA. A year ago, discounting levels were recorded at -7.7% compared to -8.2% currently.
Hobart – although discounting levels remain modest, they have nudged slightly lower over the past year as value growth has slowed. A year ago, vendor discounting was recorded at -3.8% and has weakened to -4.2% currently.
Regional Tas – the level of vendor discounting in regional Tas is quite mild and has weakened slightly compared to a year ago. Vendor discounting is currently recorded at -4.4% compared to -4.6% a year ago.
Darwin – because of the very low sales volumes, vendor discounting metrics can be quite volatile in Darwin. As at January 2019, the vendor discount was recorded at -8.2%, down from -6.5% a year earlier.
Regional NT – the level of vendor discounting is quite volatile but is slightly weaker over the past year. A year ago, vendor discounting was recorded at -4.2% compared to -4.5% currently.
Canberra – vendor discounting is minimal across the city however, as value growth has slowed, the level of discounting has weakened. A year ago, vendor discounting was recorded at -2.3% and it has increased to -2.9% currently.
With housing market conditions continuing to deteriorate, buyers thin on the ground and a high volume of stock listed for sale, it is reasonable to expect that over the coming months vendor discounting may increase further. For vendors serious about selling this data highlights the importance in setting realistic prices, marketing the property as effectively as possible and being willing to adjust prices to meet a market with far fewer buyers than have been active over recent years.