“There is not going to be an auction today,” declared the young sales executive standing in the entrance foyer of an apartment building in Abbotsford.

It was just two minutes before a two-bedroom apartment in the block was scheduled to be auctioned on a Saturday in early April – and now the sale had been called off.

Only three people turned up for the auction. The one good prospect interested in purchasing, a young woman, had opted a day earlier to buy another unit in Northcote.

A second potential buyer was struggling to get finance approved by his lender. He was missing in action, too.

Cancelling or withdrawing a booked auction can hit a motivated vendor for six. But it is happening to an increasing number of apartment sellers in Melbourne – and that’s opening up plenty of opportunities for well-researched buyers.

The golden rule when buying and selling residential property is that the more heavily supplied the market segment, the more likely it is that prices will fall.

Professional buyer Brian Capp, from Statewide Property Advocacy, believes buyers will soon be in a position to purchase units in medium and high-density buildings for below their replacement cost.

He says hundreds of apartments are listed for sale in Southbank, Docklands and Richmond and other areas of inner Melbourne, and there is a shortage of buyers for them.

“There will be some bargains to be found in the next six to 12 months in the high-rise buildings in the inner suburbs,” Mr Capp says. “Some of the second-hand two-bedroom apartments in the already established buildings, even though they are very small, are going to become an attractive buy because the replacement cost is greater than the price the owners are asking.”

In some pockets of the inner suburbs, the surge in new apartment construction has put a brake on prices for older apartments built between the 1920s and the 1980s. At the right price, these units offer good value because they are larger than most modern apartments and have a high land-to-unit ratio.

According to a market analysis released this month by Capital Economics, apartment prices in Melbourne could fall 8 per cent this year and by 4 per cent in Sydney.

“Units look much more vulnerable than single dwellings, while Melbourne appears to be the most exposed of the eight capital cities,” chief economist Paul Dales wrote in the analysis.

He maintains that while prices may only edge lower this year and in 2019, higher interest rates will probably mean they will fall more sharply in 2020 and 2021.

The Abbotsford apartment that was up for grabs two weeks ago was in a medium density block at 302/88 Trenerry Crescent. The property had a very small lounge room but there were plus-factors, too, such as a balcony overlooking the old Collingwood football ground, Victoria Park, two bathrooms, a car park and a price quote of $550,000 to $580,000.

Veteran auctioneer Chris O’Shaughnessy of Biggin & Scott, who called off the Abbotsford auction, said that many unit sellers had paid inflated prices when they bought properties off the plan.

He said these owners had generally paid 10 per cent too much, and it would take two years for prices in the unit market to stabilise.

“The apartment market is struggling,” Mr O’Shaughnessy said. “Buyers are very price sensitive and the owners don’t want to accept the reality of the value of their property.”

Such buyer-friendly conditions are tossing up opportunities for astute first-home buyers who are prepared to research price trends in particular buildings and areas.

And because of a crackdown on lending to property investors that has reduced their appetite for real estate purchases, millennial and Gen Y buyers face less competition in today’s market.

Real Estate Institute of Victoria president Richard Simpson said it has become more difficult for investors to obtain finance and they are unable to take out interest-only loans unless they pay a premium to their lender.

“First-home buyers are filling that hole in the market where the investors were, so they’re taking up a lot of stock especially in the inner apartment market and in the outer suburbs where the price-point is $650,000 or below,” he said.

Mr Simpson said apartments remained relatively affordable, even in the city’s most exclusive neighbourhoods. “Apartments allow buyers to enter a multimillion-dollar suburb for just a fraction of the price of houses in the same suburb.”