Australian auction clearance rates have plummeted to 47 per cent, marking the first time the national weighted average has dipped below the 50 per cent threshold since the onset of the COVID-19 pandemic in April 2020. According to data from information services company CoreLogic, the sharp decline reflects a cooling property market driven by sustained high interest rates, inflationary pressures, and a significant drop in vendor confidence.
Why are auction clearance rates falling?
The decline in clearance rates is primarily attributed to a “crisis in confidence” among sellers and buyers, according to CoreLogic research director Tim Lawless. Mr. Lawless notes that while interest rate hikes have been a primary driver, the market has seen an accelerated downward trend following the federal budget. In Sydney alone, 166 auctions were withdrawn last week, representing the highest withdrawal rate across all Australian capital cities. Of the 645 scheduled auctions in the city, only 225 resulted in a sale.
A “withdrawn” auction is counted as a non-clearance in industry data. High withdrawal rates are often seen as a leading indicator that sellers are losing confidence in achieving their reserve prices.
Is the housing market shifting toward buyers?
Market conditions have officially transitioned into a “buyer’s market,” according to Mr. Lawless. With more stock remaining on the market and less urgency among participants, buyers now possess greater leverage to negotiate prices. While the Reserve Bank of Australia (RBA) opted to hold the cash rate at 4.35 per cent during its June meeting, the damage to buyer sentiment from previous increases—combined with economic data showing a loss of momentum and rising unemployment—has stifled growth.
Growth trends across major capitals
The cooling effect is not limited to Sydney and Melbourne, where values have been trending downward since late last year. Data provided by CoreLogic highlights a broader deceleration across the country:
- Adelaide: Home values rose just 0.3 per cent over the last four weeks, the lowest rate of growth in over a year.
- Brisbane: Values increased by 0.5 per cent in the same period.
- Perth: Growth remains the strongest of the capitals at 0.9 per cent, though this is less than one-third of the growth rate recorded at the end of last year.
What should sellers expect in the coming months?
Homeowners looking to list their properties must be “quite realistic” regarding market expectations, according to Mr. Lawless. As the economy loses steam, the pace of housing value growth is expected to continue its downward trajectory. Prospective sellers may face longer days on market as buyers take advantage of increased inventory and reduced competition. This divergence in market power is widening the gap between established property owners and those attempting to enter the market for the first time, despite some homeowners retaining a “financial shield” of equity.
If you are considering selling, monitor your local clearance rate rather than national averages. Localized data often provides a more accurate picture of demand in specific suburbs.
Frequently Asked Questions
- What is an auction clearance rate?
- It is the percentage of properties that sell at auction compared to the total number of auctions scheduled. Rates below 60 per cent generally indicate a softening market.
- Why do high interest rates affect auction success?
- Higher rates increase borrowing costs, reducing the budget available to buyers and lowering the maximum price they are willing to bid at auction.
- Are auction withdrawals common?
- Withdrawals increase when sellers feel they cannot reach their reserve price, choosing to take the property off the market rather than risk a “passed-in” result.
Are you navigating the current property market as a buyer or seller? Share your experiences in the comments below or subscribe to our weekly property newsletter for the latest data updates.
