Sellers need 55 days and a 7.2% discount to find buyers

Houses are now taking 55 days to sell compared with 45 days at the same time last year, according RP Data-Rismark.

And to get a sale vendors are having to typically knock 7.2% off their asking prices across the capital cities. The required discount was 5.7% in July last year.

“The build-up in the number of homes being advertised for sale together with the slow-down in buyer demand has once again seen average selling times expand,” says Tim Lawless, RP Data research director.

“If these soft trends persist, the spring selling season is likely to open up some attractive investment opportunities for prospective buyers.

“In contrast, the selling environment is likely to be challenging for vendors, particularly if they have unrealistic price expectations,” Lawless predicts.

The softening market is also reflected in house price data, which reveal that prices are down in most capital cities.

Westpac senior economist Matthew Hassan says the weakness of prices in the July RP Data-Rismark report is “of some concern”.

“It suggests most markets are experiencing significant price corrections rather than just price slippage,” Hassan says.

“The downturn nationally is still a fairly 'soft landing', but with consumer sentiment slumping badly through July-August there is a risk further price declines could see a negative feedback loop develop between prices, expectations and demand in some markets.

“When the 2008-09 correction reached a similar point, aggressive policy easing – both in the form of rate cuts and first home buyer incentives – provided the catalyst for a swift turnaround.

“Although our analysis continues to point to substantial 'pent-up' demand for housing currently sidelined, particularly in first home buyer segments, any support from policy is likely to come later in the piece and be considerably milder.

“Westpac's forecast for 100bps in rate cuts starting in December should be sufficient to restore demand and stabilise prices in 2012 but near term risks are clearly to the downside,” Hassan says.