Exclusive data shows that the gap between the final sale price and the list price varies from area to area, with properties in 'lifestyle' areas on the fringes of the city tending to sell for less than the list price.
This is the opposite of what happened when 'FOMO' or 'Fear of missing out' was prevalent amongst homebuyers and most properties sold for much more than the asking price.
This is particularly evident in areas favoured by Sea Change and Tree Change buyers, which were once thriving in 2021 and early 2022, but now appear to be one of those areas where buyers can take a hard line in negotiations.
In June, the Southern Highlands and Shoalhaven area saw a whopping nearly 76 per cent of properties sell for less than list price, 23 per cent sell for asking price and only 1.4 per cent sell for more than asking price.
In the Hunter Valley, according to PropTrack, 57 per cent sold below asking price, compared to 54 per cent in Sydney's St George and Canterbury-Bankstown areas.
In the south-west of Sydney, which includes Liverpool and Fairfield, around 52 per cent of sales resulted in less than list price. This excludes auction sales.
The Illawarra region was another booming market during the pandemic, with 46 per cent of sales turning out below list price, PropTrack reported.
PropTrack economist Anne Flaherty said the market was very different from a year or two ago, with rapidly rising interest rates putting downward pressure on borrowing capacity.
"The average borrower's ability to borrow has fallen by 30 per cent since interest rate rises began," she says." In a growing market, sellers tend to undervalue their property, but in a falling market the opposite may be true ...... This data suggests that expectations need to change.
Not all properties are selling for less than the list price, and cheaper markets tend to have more properties selling at or above the list price.
This includes the Blacktown area, where 20 per cent of transactions were above list price and 51 per cent sold at list price.
About 38 per cent of properties in the North Beaches traded above list price, but an in-depth survey of recent sales shows that most of the higher-than-expected prices were for lower-priced units.
The bottom end of the market has become more competitive as interest rate increases have pushed many buyers to the bottom end of the market," said James Algar, a broker with Mortgage Choice.
"Our clients who are spending less than $900,000 are really struggling. Once you get over $1.3 million, it's not as competitive.
"That's because these homebuyers typically need a $1 million mortgage, which means they need a childless annual income of at least $250,000 to qualify for a loan at current rates. There aren't many families with that kind of profile.
Whether or not an offer can be accepted for less than the list price depends a lot on the type of property being sold, said Michelle May, a buyer's agent.
Detached homes in most areas are in short supply and competition is fierce, she said, so there is less wiggle room for negotiation.
"The motivation of the seller usually plays a big part. If it's a divorce and they need to sell, they may be more willing to reduce the price," she says.
But if it's a quality property, in a great location and in line with comparable sales, there's no need to depress the price.
Jane Thompson recently bought a unit in Summer Hill for a price she was "happy with," but said she knew the apartment complex well, which allowed her to make a quick decision.
"I already lived in the neighbourhood. I didn't have any doubts about it," she said." I felt I had to act quickly because the market was getting competitive again and there wasn't much inventory left.
