RP Data has been tracking the average number of days properties take to sell and the average vendor discount since the beginning of 2005.
Both measures have recorded a significant improvement throughout 2013 and the average number of days on the market is currently at a historically low level.
Average vendor discount excludes properties sold at auction and those which have sold above their list price and measures the difference between the first advertised price and the ultimate selling price of a home.
The figure is then expressed as a percentage. As at December 2013, the average discount for a capital city house was -5.7% and for a unit it was -5.5%.
At the same time in 2012, discounting levels were recorded at a much higher -6.9% for houses and -6.3% for units.
The current levels of vendor discounting are the lowest they have been since early 2010 for houses and mid to late 2010 for units.
An analysis of sales across the combined capital cities found that over the final quarter of 2013 29.5 per cent of all houses and 37.5 per cent of all units sold, transacted at a price which was at or higher than the original list price.
These figures were greatly improved from the 25.3 per cent for houses and 30.8 per cent for units at the end of the September 2013 quarter.
Although a relatively high proportion of properties are selling above the list price, the majority of homes continue to experience price negotiation and ultimately sell at a reduction from their original list price.
The average time (days) on market figure excludes properties sold at auction and is measured by looking at the difference between the first advertised date of the property and the contract date once sold.
Based on a data series from the beginning of 2005, the average days on market figures for the combined capital cities are at historic lows of 38 days for houses and 35 days for units.
At the same time in 2012 the average days on market for capital city houses was recorded at 56 days and for units it was 53 days.
With homes seeing lower levels of reductions to the original list price it is no wonder that we are seeing an improvement in the average number of days on market.
Lower discounting levels mean that buyers and sellers are generally able to come to an agreement on price quicker.
Looking at the level of discounting taking place in the market across the average time on market we see that well priced new stock is selling quickly at a very low discount level.
Across house and unit sales, homes that sold in less than 30 days had an average vendor discounting level of -3.3% in December 2013.
At the same time, those homes that sold between 30 and 60 days had an average discount of -4.7%, -4.9% was the average discount for homes selling between 60 and 90 days, homes sold between 90 and 120 days on the market had an average vendor discount of -7.2% and homes which sold after more than 120 days had a typical discount of -8.5%.
The data highlights the importance of setting an appropriate initial list price, homes which are appropriately priced sell quickly and with a low level of discounting whereas the longer you keep the property on the market it generally results in a larger discount in order to achieve the sale.
The improvement in both discounting and time on market is reflective of the broader housing market conditions.
Property transactions have increased measurably over the past year and home values have also risen. [sam id=34 codes=’true’]
These conditions are reflective of the increasing level of competition for those properties available for sale and have undoubtedly contributed to the improved discounting and time on market figures.
With mortgage rates likely to remain at their current low levels over the coming months and housing market activity likely to rebound from its usual December and January slumber we would anticipate that discount levels will potentially improve further over the first half of 2014 and that the average time on market is likely to remain at current low levels.
From a sellers perspective, setting an attractive initial list price will help to ensure that the selling process is a quick one and who knows, you may be one of the circa one third of the market that is selling their homes for more than their initial list price.