REAL estate agents have a huge stockpile of unsold properties as potential buyers lose confidence.
Sales are being hit due to rising interest rates and banks tightening their lending to would-be purchasers.
Auction clearance rates in Sydney and Melbourne over the weekend were 51.7 per cent and 54.8 per cent respectively, according to Australian Property Monitors, with many vendors withdrawing their properties before they went under the hammer.
Sixty-one properties were withdrawn in Sydney, where 198 houses sold at auction -- down from 247 last week. In Melbourne 160 homes sold under the hammer, 100 fewer than the week before and far fewer than the 426 sold a fortnight ago.
In Melbourne, 331 homes were passed in at auction, indicating vendors' expectations weren't met on the day, according to Real Estate Institute of Australia president David Airey.
Mr Airey blamed the softening of the market on interest rate hikes and said buyers' lack of confidence in the market had resulted in a stockpile of unsold properties.
"In Australia, listing numbers for agents are backing up. The stockpile is huge and it's growing," Mr Airey said. "In Perth, for example, there are 17,500 properties on the market and that is around 50 per cent above what would be regarded as normal supply.
"We have been saying for some time that the Reserve Bank's interest rate rise has bitten way too hard and they have affected buyer confidence in a significant way and they have also affected the buyer's ability to borrow the money to buy the property."
Glenn Tilling and partner Tracee Rowe were confident their home in Malvern, in Melbourne's leafy south-eastern suburbs, would sell at auction on Saturday.
"Spring is always a good time to sell in Melbourne," Ms Rowe said last week.
But the house was passed in at auction without a single bid.
The couple bought the house early last year for more than $1.5 million and hoped to get up to $1.9m for the Lara Street property, which has a pool.
Property Monitors chief economist Dr Andrew Wilson said housing demand and prices would pick up in mid-2011 on the back of wages and population growth and the resurgent mining sector.
"What we are seeing in Melbourne is a pause in the market, mostly caused by a fall off in the bottom end of the market, but it's not a bubble," Dr Wilson said.
"The market was unsustainable because it couldn't be sustained by incomes, but now we are starting to see wages growth that will again fire up demand."
