Hundreds of homes that failed to sell at auction are adding to an oversupply in the market as buyers stay away during the shutdown.

The number was even higher after auctions were banned in late March because of fears of spreading COVID-19. On March 28, 555 homes were passed in and re-advertised as private treaty in Sydney. Four weeks later, only 102 homes were sold and 453 continued to languish on the market.
In Melbourne, 768 properties were re-listed as private sale after failing to sell at auction on March 28. Of these, 615 homes are still on the market.
SQM Research managing director Louis Christopher said buyer confidence is weak.
“Some people are downplaying the current low auction clearance rates due to the current forced ban on public auctions. The argument is that sales activity is still occurring or that the market is in hibernation,” he said.
“But it’s clear that those properties that have been re-advertised as a private treaty have largely not sold. If there were plenty of buyers in the market, more of these properties would have sold by now.
“But they havent. The properties are just sitting there, and it’s a huge issue.”
The amount of housing stock effectively in the market could even be higher due to the growing number of homes for sale that are not listed.
Buyers’ agents from the major cities have reported increases in the number of off-market properties of around 50 per cent in the past few weeks, although the figures could not be tracked.
Mr Christopher said the impact of the big drop in buyers’ confidence was being compounded by the freeze on net migration, which reduced housing demand.
Even with the housing completion rate forecast to drop to its lowest in 70 years supply will likely exceed demand, Mr Christopher said.
“We’re expecting some 170,000 dwellings will be completed this year,” he said.
“Without net migration demand we’re losing 232,000 needing accommodation. So we’re conservatively expecting a surplus of well over 120,000 properties remaining unoccupied this year if net migration continues to be frozen for most of 2020.
“That is going to be one major hangover for the housing market, particularly for the rental market. So, while the probabilities have moved more towards a V-shaped recovery, the risks remain in the housing market due to the demand and supply imbalance.”