How Much Leverage do Buyer’s Have?

With conditions in the residential market slowing substantially during April, we examine the level of vendor discounting apparent nationally and across each of the capitals.

Vendor discounting is a measure of the difference between the price that a property is initially listed for compared to the price at which it ultimately sells. The result is measured as the percentage change in listing price. It is pretty rare that a property will sell for its initial listing price, generally the ultimate selling price will be between 5% and 6% lower than what the seller was originally asking. As market dynamics change, you’ll generally notice that vendors take some time to become aware of the change and the amount of vendor discounting will increase.

As the Global Financial Crisis hit during September 2008, vendor discounting blew out to -7%, indicating that vendor pricing was well and truly not adjusting to falling property prices and few active purchasers. As at April 2010 and on a national capital city basis, the average level of vendor discounting for houses was recorded at -5.4%.

Source: RPData Property Pulse