Discounting at lowest levels in decades

The number of Perth sellers discounting their houses is at the lowest level in the past 20 years according to REIWA data.

So far this year, just 12.6 per cent of houses sold for less than the listed price. This is significantly lower than the rates of discounting in the previous boom when 44.3 per cent and 46.3 per cent of houses were sold for less than their listed price in 2013 and 2014, respectively. 

REIWA CEO Cath Hart said the figure highlighted just how tight the market was.

“Along with strong price growth and record low days on market, this figure shows the incredible effect the high level of competition for houses is having on the market,” she said.

“Many sellers are receiving multiple offers, with nearly 90 per cent of houses selling for more than the listing price.

“REIWA data for Perth house sales to May this year shows they are selling for about 5 per cent more than the listing price. I note this is an average – every sale is different, with some selling for much more and some selling for less.

“Pre-COVID, the last time the average was in positive territory was in 2006, when houses on average sold for 3.2 per cent more than the listing price. However, the proportion of discounting was much higher at 49.0 per cent.

“Even during 2013 and 2014, houses sold on average for marginally less than the listing price.”

Ms Hart said the current low level of discounting was not surprising.

“We’re in a rising market. There is strong competition for properties and this puts upward pressure on prices,” she said.

“Agents base their listing price on comparative sales, but the competition between buyers will often see it sell for more. How much more is very difficult to predict in the current market.

“And with homes selling so quickly, prices are moving upward quickly – each sale creates a new baseline for a neighbourhood. New homes in that area come to market above the baseline, but then competition often sees them sell above that which resets the baseline.”

Ms Hart said the proportion of sellers discounting was at the lowest levels in the most sought-after price ranges.

“About 10 per cent of sellers accepted an offer below the listed price for properties listed at between $350,000 and $800,000,” she said.

“Such a small percentage means, on average, houses sold for more than 6 per cent above the listing price.

“The greatest proportion of discounting took place at the highest end of the market.

“For houses sold over $3 million, 31.32 per cent sold for below the listing price. Here, the sale price was 2.63 per cent below the listing price on average.”

Ms Hart said the data suggested now was not the time to make a cheeky offer.

“The traditional approach in real estate has been to come in below the asking price, but the strong competition for homes means buyers need to make their first offer their best offer,” she said.

“And this doesn’t just mean in terms of price. Ask the agent what you can do to make your offer more attractive to the seller. In this market that could be a longer settlement, the chance to rent the home back while they find a new home or a cash offer.”