In brief
- Australia's preliminary auction clearance rate rose to 54.8 per cent last week, the highest level in seven weeks.
- Clearance rates remain subdued by historical standards amid higher interest rates, cost of living pressures and global uncertainty.
Auction clearance rates have climbed back above 50 per cent after reaching their lowest level in more than six years, but analysts caution the rebound may reflect a drop in the number of properties going under the hammer rather than a broader market recovery.
The preliminary auction clearance rate across the combined Australian capital cities rose to 54.8 per cent last week, up five percentage points from the previous week and the highest level in seven weeks, according to property research firm Cotality.
It follows a low point in late June, when just 47.4 per cent of almost 1,900 homes taken to auction were sold — the weakest rate since April 2020, when the COVID-19 pandemic disrupted the housing market.
Auction volumes are now about 8 per cent lower than at the same time last year.
Industry figures say fewer listings, more realistic seller expectations and fewer properties competing for buyers can push clearance rates higher even while broader market conditions remain soft.
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They say higher interest rates have reduced buyers' borrowing capacity, while economic uncertainty and recently legislated tax changes affecting property investors have also weighed on confidence.
'Significant change in the market conditions'
Sydney recorded a preliminary clearance rate of 57.5 per cent from 452 auctions, up almost six percentage points from the previous week.
Melbourne's rate rose 1.7 percentage points to 56.2 per cent across 585 auctions.
But clearance rates remain weak by historical standards and property experts have urged caution, saying it was too early to tell whether last week's uptick reflected a broader trend.
Real Estate Institute of Australia president Jacob Caine said the auction market was still adjusting to uncertainty.
"The brutal reality is that the auction market in general is relatively flat compared to recent historical performance," he said.
"The external factors around tax, around policy, around international concerns are creating uncertainty.
"In an uncertain market, both sellers are more reticent to offer their property via auction, buyers are more reticent to put their hands in the air and bid on properties."
Caine said there were fewer homes available at auction, but many sellers were becoming more realistic about price expectations.
"[Buyers are] still out there and they're still active, but they've got fewer choices in the auction market," he said.
"As a result, auction clearance rates tend to bump up quite significantly when you see a drop-off in those volumes."
He said agents were having "difficult conversations" with vendors about the changing market.
"[They are informing] them perhaps that the property being offered today, in contrast to a neighbouring property that might have been offered 12 months ago, is a radically different proposition," he said.
Cotality head of research Gerard Burg said auction volumes were down about 8 per cent compared with the same time last year.
"This time last year, we were in the process of seeing rate cuts from the Reserve Bank. There was a lot more optimism [about] the direction of rates," he told SBS News.
"Now, where we've had three rate rises this year, still a little bit of uncertainty ... so from that point of view, [there has been] quite a significant change in the market conditions."
Burg said that while some heat had been taken out of the market in in Sydney and Melbourne, affordability remained a major barrier for many buyers because higher interest rates had reduced borrowing capacity.
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