Auction clearance rates across Australia have fallen for another consecutive week, with fewer than half of the properties taken to auction in the past seven days selling under the hammer.
Prospective buyers are becoming increasingly reluctant to enter the market as they contend with higher interest rates, stricter lending standards, falling property values and the planned removal of capital gains tax concessions.
Data from Cotality showed Sydney’s auction clearance rate had dropped to 48.2 per cent this week. One real estate industry source told the AFR that conditions in the city were “extraordinarily weak”.
Melbourne recorded a clearance rate of 54.8 per cent, while Brisbane’s fell to a particularly concerning 25.2 per cent.
The national auction clearance rate came in at 48.4 per cent, a sharp reversal from February this year, when rates were above 70 per cent.
Earlier this month, Australia recorded a house-price decline of a scale seen only twice before.
According to Domain’s September Quarter 2026 House Price report, weakening buyer confidence has pushed house prices lower in every capital city for the first time in 15 years — and only the second time on record.
Australian house prices dropped by a record 4.7 per cent during the quarter. Perth experienced the steepest decline, falling 7.4 per cent, while Brisbane and Adelaide also recorded their largest quarterly house-price falls on record.
Australia’s auction clearance rate fell below 50 per cent this week
Sydney’s median house price has fallen to a two-year low after dropping 4.7 per cent in the September quarter to $1.66 million. Melbourne, meanwhile, posted its biggest quarterly decline in four years.
Housing Minister Clare O’Neill said the latest decline was consistent with the cyclical nature of Australia’s property market.
“This is the third or fourth downturn in house prices that we’ve seen just in the last decade … it is unfair to report about house-price growth looking at this just in the last six months,” she told ABC Radio on Thursday.
“We do need to slow house-price growth around Australia, and if that is controversial to you, I’m happy to wear the controversy.”
The federal government’s decision to end negative gearing and reduce the capital gains tax discount in May’s budget has also attracted some blame for the property market downturn.
However, the changes will not take effect until July 2027, leading economists to largely link the current decline to the Reserve Bank’s decision to lift the cash rate to its highest level in 15 years.
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A weaker jobs result for September reduced the expected likelihood of a Melbourne Cup day rate rise, but RBA deputy governor Andrew Hauser said on Wednesday that “hard choices” remained ahead. He also stressed that the November meeting was still live.
Mr Hauser said higher inflation expectations were becoming entrenched as a prolonged supply shock linked to the Middle East continued, describing the situation as “a central banker’s nightmare”.
Investors and banks have grown more cautious following capital gains tax changes and a series of interest rate rises, with further increases possible before January
Ms O’Neill said the government’s tax reforms would deliver lasting benefits for the housing market, regardless of the Reserve Bank’s future interest-rate decisions.
“The changes that we have made to the housing market are permanent changes that, for the first time at every auction around the country, put a first-home buyer on a level playing field with an investor,” she said.
Some, including Melbourne couple Jessica Ongarello and Callum McIntyre, have managed to take advantage of the tumbling market.
‘We saw how depressed the market was and we’re like, this is our opportunity to buy in the area that we want to live in,’ Ms Ongarello said.
Ms Ongarello said her bank’s lending calculation was revised after September’s interest rate rise, which left her with a home loan offer $100,000 lower than the initial quote.
‘We’ve missed out a couple of times now on being a successful bidder because of that,’ she said.
House prices could continue to fall for many months to come, Domain chief residential economist Nicola Powell said.
‘Something needs to shift to alter the confidence to transact, and I cannot envisage the confidence changing until we see an interest rate cut,’ she said.
‘And ultimately that prospect is in the latter part of next year.’
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Has Australia made home ownership too difficult for ordinary buyers and is this market correction helping?
