Panicked homebuyers have abandoned Sydney’s normally packed auctions since Labor’s bombshell May budget tax reforms.
Auction clearance rates have deteriorated to levels similar to those experienced during the Global Financial Crisis of 2008, with Sydney copping its seventh successive week of sub-50 per cent clearance rates, the latest data shows.
MORE: Shock NSW plan to boost foreign home buying
Just 41 per cent of NSW homes up for auction last week sold, early PropTrack figures show, numbers similar to the first Covid lockdown in April 2020, when buyers were not permitted to attend on-site auctions.
That success rate is expected to drop further as more NSW results are reported, with 759 of last week’s 918 planned auctions recorded in the data so far.
Many homes going up for auction are getting withdrawn before bidding can take place, usually after a lacklustre interest from buyers. Picture: Mark Wilson
MORE: Bombshell immigration housing finding exposed
Historically, major price plunges occur when the auction success rate drops below 50 per cent.
Sydney home values have already dropped an average of $75,000 in the three months to June, the second largest nominal fall ever, Australian Bureau of Statistics show, with more falls predicted.
Sydney’s final clearance rate the week prior to last was even worse at 41.7 per cent – the lowest level since the city’s first Covid’s lockdown in April 2020.
SQM Research, using a slightly different measure for failed auctions, showed a clearance rate of 31.9 per cent that same week, similar to April 2020, and late 2008 during the GFC.
SQM Research director Louis Christopher blamed recent low auction clearance rates to a “collapse” in buyer confidence.
MORE: Aussie homeowners ‘owed $1bn in refunds’
Treasurer Jim Chalmers’ announcement of tax reforms have created an air of uncertainty at auctions, experts claim. Picture: Hilary Wardhaugh
He said sentiment started falling with the interest rate hike in February then worsened after subsequent rate rises, the Iran war and, critically, May’s federal budget.
Labor’s reforms included cuts to negative gearing benefits and capital gains tax concessions. Both reforms passed parliament last week and will take effect in July 2027.
In a deal with the Greens, people are also no longer able to use self-managed super funds (SMSFs) to borrow for investment properties.
“We are now in a downturn that will last some time,” Mr Christopher said.
“Agents are telling sellers that no one will be turning up at their auctions.”
Sydney’s run of weekly auction clearance rates at under 50 per cent started the week the tax reforms were announced in the May budget, auction figures showed.
MORE: Tax stance slammed as ‘hypocrisy on steroids’
Competition at auction was very strong through much of 2025. Picture: Julian Andrews.
Auctions have had an even worse success rate in certain regions, with PropTrack figures from the past four weeks showing just 26 per cent of Central Coast auctions had a sale.
In the Blacktown region, only 34 per cent of auctions produced a sale, while the success rates in the Hills District, northern beaches and north shore were between 37-38 per cent.
Last year, many of these regions had 60-80 per cent auction success rates.
The bulk of properties not selling in the past month were withdrawn from auction prior to scheduled proceedings, normally a marker of lacklustre buyer interest. A high number of homes were also passed in at auction after attracting no bids.
“Prices are already falling and we are going to record a further deterioration. Price falls will seem rather sizeable,” Mr Christopher said.
MORE: Jackie O’s cunning $30m exit plan amid Kyle split
SQM Research director Louis Christopher said Sydney was likely to experience an extended property downturn.
SQM Research modelling showed Sydney home prices were in line to fall 9 per cent this year, scrubbing $100,000 off a dwelling’s average value.
ANZ projections were similar, showing a Sydney fall of up to 8.4 per cent. Commonwealth Bank has predicted a 6 per cent average drop.
Mr Christopher noted price falls would likely extend well into 2027: “Peak to trough, this could be a much larger downturn.”
PRD chief economist Diaswati Mardiasmo said buying at auction required confidence that few buyers had in the existing climate, and government policy was contributing to the market uncertainty.
“An auction means you have to be completely sure it’s the property you want,” she said. “You have to go for gold. You need certainty. Many buyers don’t have that.
“Most (would-be) buyers don’t have certainty they’ll be able to afford their loans or even still have a job.”
Much of the market weakness has been concentrated at the top-end of property sales.
The Albanese government’s tax reforms also appeared to be weighing heavily on owner-occupiers, not just investors, because buyers were unsure how the policies would impact prices, leading to fears of overpaying for property, Dr Mardiasmo added.
“There are still so many questions on how policies will work … many people are waiting for clarity and they’ve tapped out of the market until they learn more about the terms and conditions,” she said.
Auction group Menck White director and auctioneer Clarence White said bidders were wary that homes they pursued now could become cheaper later this year.
“It’s a bit like chasing a slippery soap down the hill. Buyers are trying to figure out where prices are going to land,” he said.
The Albanese government has consistently downplayed the impact of its tax reforms. A spokesman for federal Housing Minister Clare O’Neil said: “The changes in the budget mean house prices will be 2 per cent lower than they would otherwise have been.”
English (US) · 