Fewer homes are selling under the hammer.
Australia’s housing market has been whipped into a tail spin, with new figures revealing auction clearance rates have plunged to levels similar to the dark days of the 2008 Global Financial Crisis.
Experts said the weak performance suggested home price falls could accelerate, with what had been a correction primarily in Sydney and Melbourne now also taking root in Brisbane, Perth and Adelaide.
Final auction clearance rate figures from SQM Research, which track the success rate of scheduled auction campaigns, showed just under a third of Sydney auctions produced a sale last week.
It was a similar story in Melbourne, where 37 per cent of auctions produced a sale, while just 17 per cent of auctions cleared in Brisbane, albeit across a much lower volume of auctions.
The 31.9 per cent clearance rate in Sydney was the weakest since the early Covid pandemic in April 2020, but SQM Research director Louis Christopher noted the 2020 market weakness had only been a “short blip”.
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A home in this building on Whiteside St in Sydney suburb North Ryde sold in May for $672,000, well below the 2015 price of $720,000.
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“It was only a few weeks. What we’re now seeing is a sustained, consistent market weakness,” he said, noting that current conditions were much more aligned with late 2008.
The result would be sharper falls in prices, including a 9 per cent drop in Sydney prices this calendar year and Melbourne falls averaging 7 per cent, Mr Christopher said.
“We’re seeing a combination of factors at work,” he said.
“There was a rate rise in February, then the outbreak of war in the Middle East that generated rapid fuel price rises and a collapse in consumer sentiment.
“Over and above that, there were two more interest rate hikes and then property taxation changes. That’s all contributed to the current downturn.”
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Ray White director Thomas McGlynn said vendors who were pricing their homes to meet the market were still attracting interest. Picture: Sam Ruttyn
Mr Christopher added that the Labor government’s announcement of capital gains tax and negative gearing reforms in the May Budget was one of the more significant forces pushing down prices.
“There was a lurch downward in auction clearance after the tax changes. They have been consistently low for a fair period of time. That signifies to use the downturn will be with us for some time.”
The data from SQM Research showed the bulk of the homes that didn’t sell at auction last week were changed to private sales or withdrawn from the market altogether.
“Agents are essentially telling vendors that no one is turning up. They’re saying ‘I don’t have any bidders’ so they’re advising their vendors to reschedule.”
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A unit in this northwest Sydney apartment block recently sold for $150,000 below its 2015 price.
Ray White CEO of Performance and Value Thomas McGlynn said there was a reluctance from would-be sellers to commit to the market.
Withdrawn listings, conditional buyer preferences, and vendors holding above-market price expectations combined to suppress results more than buyer demand alone, Mr McGlynn said.
“What we’re seeing isn’t simply a case of buyers disappearing, its vendors choosing not to transact on terms the market will support right now,” he said.
“The buyers are there but the gap between vendor expectations and market reality is the friction.”
Mr McGlynn said there was evident that homeowners who were committed to selling and were realistic with their prices prior to auction were attracting demand.
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SQM Research director Louis Christopher said what had started as a Sydney and Melbourne downturn has now spread to other capitals.
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Ray White conducted 336 auctions last week from 618 scheduled, with a final national auction clearance rate of 51.5 per cent.
Mr McGlynn noted that well-planned auction campaigns, with realistic sellers, were still outperforming private treaty sales.
Accurate pricing remained one of the strongest drivers of buyer engagement, he said.
“The agents getting the best results are combining realistic price expectations with strong presentation and proactive buyer follow-up. That combination is still cutting through even in a more measured market.”
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