“A lot of agents are losing money. The kickbacks help keep their businesses running,” he said.
Properties in top-end suburbs in Sydney and Melbourne have been heavily discounted during sale negotiations or had their advertised prices cut as clearance rates and market pessimism grows.
A property in East Melbourne, about 3 kilometres from the central business district, is selling for more than 40 per cent less that what it was listed in the middle of last year.
The price for the single-storey Victorian house with two bedrooms and four living spaces is around $3.65 million to about $3.9 million, compared with between $5.75 and $6 million six months ago.
Paul Caine, managing director of Caine Real Estate, which is selling the property, said the market is “steadying up”.
Martin North, principal of Digital Finance Analytics, an independent consultancy, said discounts of more than 40 per cent were also being made in Victoria’s Red Hill, a leafy weekend retreat about 82 kilometres south-east of Melbourne, and Sydney suburbs including Box Hill and Agnes Banks.
“Typically, in a downturn it’s the top end of the market which dies first, and the decay in price spreads down the market like a canker,” said Mr North.
He estimated one-in-ten households were in negative equity, where the value of the mortgage is bigger than the expected realisable value of the property.
The falls are out-pacing predictions by major lenders, such as Gareth Aird, senior economist for Commonwealth Bank of Australia, the nation’s largest lender.
Mr Aird said property prices will this year fall by about 5 per cent in Sydney and 6 per cent in Melbourne.
That would take the fall in Sydney prices from their July 2017 peak to around 15 per cent and 13 per cent in Melbourne.
Mr Aird expects the national peak to trough falls to be about 12 per cent.
This contrasts with research company LF Economics, which has predicted a “bloodbath”, with falls this year in Melbourne and Sydney – before allowing for inflation – of between 15 per cent and 20 per cent. This could rise to 25 per cent if the finance and housing markets continue to deteriorate.
“Without a government, or central bank, ‘bazooka stimulus’ that hits the bullseye from an ever-increasing distance, the Sydney and Melbourne property markets are entering a property bloodbath. Strong price falls combined with persistently negative income returns run by two-thirds of property investors will result in a significant hit to total returns.”