Melbourne ended 2018 with a more than 36,000 home hangover as the city’s struggling auction market and falling house prices fell short of seller expectations.

New figures from SQM Research reveal the number of homes still listed for sale at the end of last year was up 25 per cent on the about 29,000 listed at the same time in 2017.

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SQM Research boss Louis Christopher said the higher figure at the end of 2018 was a sign homesellers were refusing to accept low-ball offers.

“It’s predominantly older listings that are just not selling,” Mr Christopher said.

“This is just further evidence of the extent of the housing market correction.

“The base of the market in Melbourne has just blown right out.”

But that was not an open invitation for homebuyers to make low-ball offers.

“Buyers can’t be too greedy and try to pick up a property for a ridiculous price,” he said. “There are a lot of people who are refusing to sell for less.”

Further figures from SQM show the number of homes for sale across the city fell from 43,727 at the end of November last year, but Mr Christopher estimated a substantial portion of that reduction was driven by homesellers withdrawing their property rather than selling it.

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“There's been a fair bit of people pulling out of the market entirely,” Mr Christopher said.

He said many of those sellers would look to put their home back on the market this year.

While the number of homes for sale has yet to break the 49,000 listing record set in the depths of the last market correction in early 2012, having more homes for sale puts further downward pressure on home prices.

“The reality is that by and large sellers have not been willing to accept the initial bids and that’s meant that there’s more and more pressure on the market,” Mr Christopher said.

“Those who meet the market sooner are far better off than those who ride the market down.”