This home on Longueville Rd in Lane Cove sold for $135,000 over reserve at auction, but most other auctions were not as successful.
WOULD-BE home buyers have been abandoning Sydney property sales amid a restrictive lending environment that has made it challenging to get a mortgage.
Early figures showed more than half the homes that went to auction last week failed to sell under the hammer — the eighth successive week where the city clearance rate was under 50 per cent.
Research group CoreLogic reported a preliminary auction clearance rate of 48.4 per cent for the week from 533 declared auction results.
With just shy of 300 results still to be reported, housing experts said they expected the final clearance rate to drop closer to about 42 per cent.
MORE: Startling failure rate of auctions
First-timer pays $135k over reserve
This would be a similar figure to the week prior when 42.6 per cent of auctions were successful.
High Sydney home prices mean buyers need to take out big loans at a time when banks have become restrictive with financing.
About 60 per cent of the auctions held over the same week last year were successful.
Newly published research showed the restrictive lending environment has been one of the main drivers of the auction slowdown.
Data from the Australian Bureau of Statistics revealed demand for home loans has been falling, with nearly 4 per cent fewer loans issued over September.
This included a 4.2 per cent reduction in the value of loans for owner occupiers and a 2.8 per cent reduction in the value of loans to investors.
Mortgage Choice CEO Susan Mitchell said demand for loans could drop even further over coming months as investors await the outcome of the federal election.
The election would be significant because the Labor Party is proposing to reform negative gearing if it wins.
“There is speculation that investor borrowing could fall further if the Labor Party’s proposed changes to negative gearing are put in place,” Ms Mitchell said.
“As a tax concession, negative gearing assists investors enter the real estate investment market by reducing the cost of purchasing and servicing investment properties.”
Demand for loans from owner occupiers could also drop due to the high amounts buyers needed to borrow in order to pay Sydney’s inflated prices, she added.