Home auction clearance rates have plummeted as recent budget tax reforms drive investors to the sidelines with experts predicting price falls to continue.
SQM Research has revealed last week’s NSW auction clearance rate was just 31.1 per cent, with 881 total auctions scheduled including 149 properties sold prior, 144 rescheduled, 399 readvertised in private treaty and 39 withdrawn.
It is the lowest clearance rate since prior to the Covid pandemic in early 2020.
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Auction rates have hit a near six-year low. Picture: Sam Ruttyn
SQM Research Managing Director Louis Christopher said he started noticing weakness in numbers the weekend prior to the budget, with Sydney’s clearance rate at 37 per cent.
“This week just gone by is the first weekend and full week passed since the budget, and 100 per cent, the market’s been impacted by the property taxation changes,” Mr Christopher said.
“And I agree that it would predominantly be investors who have stepped back on the sidelines,”
He added this would include other homebuyers as well.
“Who wants to buy when the market is falling sharply?” he said.
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Treasurer Jim Chalmers’ controversial budget has hit the housing market hard. Picture: Gaye Gerard / NewsWire
Mr Christopher also forecasts sales volumes will suffer a 30 per cent decline this quarter when compared to the first quarter of 2026.
“I think what we’re going to see is a very, very tough period, especially for real estate agents,” he said.
“One thing that hasn’t been discussed in all this is how this actually flows through to state government revenues because the bulk of state government revenues are based on property stamp duty transfers.
“If you see a 30 per cent decline in [sales] volume, which I think we will, that’s going to amount to a huge percentage decline in state government revenues around the country.”
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SQM research boss Louis Christopher says auction clearance rates could fall below 30 per cent.
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Mr Christopher said he was already noticing vendors adjusting asking prices.
“We’ve been recording a steady decline in asking prices since the beginning of February 2026 in Sydney,” he said.
“Over the past 30 days, asking prices have fallen by 0.7 per cent.
“They fell again last week by about $1,700 and we are expecting this trend to continue.”
SQM Research forecast in March after the war in Iran began that Sydney house prices would fall up to 6 per cent this calendar year, and in Melbourne by up to 4 per cent.
That fall could now be greater.
According to Mr Christopher, the March forecast did not take into account property taxation changes, only the interest rate outlook at the time.
“It’s now very likely that we’re going to see housing price falls in excess of six per cent in Sydney for this current calendar year,” he said.
“These current auction clearance rates essentially would equate, if they were to continue, to somewhere between nine to 12 per cent of housing price falls in Sydney.”
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Housing prices could fall by up to 12 per cent. Picture Daily Telegraph / Monique Harmer
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He added there has also been a rise in sold priors.
“We don’t normally see that until we hit a downturn period,” Mr Christopher said.
“It happens precisely because vendors have been informed that they only have one registered bidder at auction, they’re best off to negotiate before they hit the auction.”
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