Sydney’s housing auction market has hit its weakest point in more than six years, while Melbourne recorded its worst result in almost five years, with clearance rates falling below 50 per cent.
New figures from property research firm Cotality show a preliminary clearance rate of 49.2 per cent for the past week, meaning fewer than half of all homes taken to auction found a buyer.
Cotality estimates that figure will fall further once all results are counted, likely landing closer to 40 per cent.
A clearance rate above 60 per cent is generally seen as a balanced market.
Capital city breakdown
The data shows Sydney recorded a preliminary clearance rate of 47.3 per cent, its lowest since April 2020.
Melbourne came in at 50.2 per cent, its weakest since the city’s COVID-19 lockdowns in September 2021.
Melbourne’s clearance rate was its weakest since September 2021. (Supplied: Maria Magallanes)
Brisbane had the lowest clearance rate of any capital city at 39.3 per cent, despite a slight improvement on last week.
Adelaide was the stand-out, with auction volumes jumping nearly 24 per cent, and the clearance rate soaring to 68.7 per cent — the best result in five weeks.
The data shows 21.5 per cent of auctions were withdrawn from the market this week, a smaller portion than the previous week’s preliminary reading of 23.6 per cent.
Just 1,771 homes went to auction nationally last weekend, down nearly 6 per cent from last week, and more than 13 per cent below this time last year.
Market squeeze
AMP deputy chief economist Diana Mousina said the weak results reflected a market being squeezed from multiple directions.
“The main reason is multi-fold, but most recently it’s been due to concern about lower investor demand in the housing market as a result of the budget changes,” Ms Mousina said.
“The changes in the budget are another hit to the property market.“
Diana Mousina says there are a number of reasons behind the weak results. (ABC News: John Gunn)
Changes in the May budget mean that from July 2027, negative gearing on established properties will only apply to new builds.
The 50 per cent capital gains tax discount is also getting an overhaul, replaced with an inflation-based system and a minimum 30 per cent tax on gains.
The government said the changes would help make housing more affordable, but critics argue they will cool demand for established properties.
Ms Mousina said AMP expects home prices to fall about 5 per cent over the next year.
“The lack of supply of homes, particularly in capital cities, is a major factor that will keep home prices more elevated than otherwise,” she said.
The housing deficit in capital cities is contributing to keeping property prices high. (ABC News: John Gunn)
She said the conditions may actually suit prospective buyers.
“But the lack of listings may be a problem for them if sellers want to hold back knowing it’s not a great time to sell.”
Treasurer Jim Chalmers appeared to downplay concerns of a housing market downturn on ABC Insiders today, comparing the current weakness to the 2022 rate rise cycle.
“It’s best not to overreact to data from a week or two, or even a month or two,” he said.
About 1,800 auctions are expected next weekend across the country.
