Death of the auction? Sellers move to private sales in softening market

Property sellers are increasingly moving away from the traditional auction in response to a softening housing market, new data from Domain suggests, with experts arguing that Australia has firmly entered a "buyer's market".

The online property platform has found a sharp rise in listings initially slated for auction being converted to private treaty in capital cities. Across Sydney, Melbourne, Brisbane, Adelaide and Canberra, the average proportion sales that are auctions has more than doubled from 29.6 per cent in February to 60.8 per cent in July.

Listings starting as private treaty also increased at the same time, highlighting a substantial move away from reliance on auction-day results as sellers seek the best price for their asset.

Domain's chief of economics and research, Nicola Powell, told SBS News that this shift in seller behaviour reflects the softening market conditions "unravelling across the nation".

"Many sellers are testing the market and realising that there just isn't that buyer depth there anymore," she said.

After major post-pandemic growth and following decades of steady increases, the Australian property market has seen a broad downturn over winter.

Data from property analyst Cotality shows that, while Sydney and Melbourne began to slow at the start of the year, national house price values peaked in March and have declined 3.6 per cent since.

Powell argued spring will likely be slower than usual, with Domain predicting property prices will continue to fall through the rest of the year.

"I think what we're going to see from buyers is they are going to want to get that greater value for money," she said.

The second quarter of 2026 saw the first sustained decline in national housing stock value since 2022, with Australian Bureau of Statistics figures showing a 0.3 per cent drop or $34.1 billion.

Auctions still a good idea

Shannan Whitney, co-founder of prominent Sydney property group BresicWhitney, told SBS News that shying away from auction sales could be the wrong move for sellers.

"Pricing tends to be more in line with where the market needs to be in an auction process than it does in a for sale process," he said.

"I think more vendors will be more comfortable with auction in Sydney over the next three or four months, but it just takes a little bit of time for everyone to work through the cycle."

Whitney expects the property cycle is now through its "first third" after months of price adjustments. It's "natural", he said, for sellers to want to retreat into non-auction sales where they feel safer or more in control during such a period, which he believes is now levelling off in Sydney.

"Vendors genuinely contemplating a sale are now much more aligned and educated about where the market is," he said. "Therefore, we think we expect to see clearance rates probably go up and improve over the next four months."

Sellers who aren't "in line" with the market should consider their position and perhaps pause on a sale for the next 12 months to three years, Whitney advised.

Buyers, on the other hand, are experiencing very favourable conditions. However, Whitney suggested that waiting and expecting prices to continue to drop might not be the best strategy.

Even though the market was soft, trading was better now compared with earlier in the year.

"What we're seeing now is much more engagement from buyers where they see pricing at reasonable, viable levels," he said. "We are seeing properties sell quicker now than we did six months ago."

Rapid corrections

Sustained high borrowing costs and stubborn inflation are some of the key drivers squeezing buyer affordability. At the same time, the surge in listings through autumn and winter forced national average clearance rates down to around 46 per cent.

"Listings have risen, choice is better than it once was, and particularly in markets like Sydney and Melbourne, it is very much a buyer's market," Powell said.

Economists note clearance rates below 60 per cent reduce inflationary pressure on house prices.

Major financial institutions including Commonwealth Bank have forecast a peak-to-trough decline in house prices of 8 to 10 per cent, with the market expected to hit its bottom in early 2027.

Those in the market are already pricing in the changed conditions, Whitney said, noting that the speed of information transfer at present means adjustments and property cycles happen far more quickly than they used to.

The Reserve Bank of Australia is widely expected to raise interest rates for the fourth time this year during its meeting at the end of this month. With an increased cash rate of 4.6 per cent, buyer confidence is expected to take a further hit.

If the RBA does increase rates this month, it is likely to trigger a continued "drag on inventory" as conditions slow even further.

"The cycle for buyers will lengthen and look more favourable," Whitney said.

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