Australia's property market is facing its most severe downturn in six years, with the latest data showing a stark decline in auction clearance rates. Preliminary figures reveal that just 47.4% of homes put up for auction have sold, marking a new low since April 2020 when the Covid-19 pandemic first took hold. The nation's capital cities are bearing the brunt of this trend, with major urban centres such as Sydney and Melbourne struggling to keep pace.
The weighted average clearance rate varied significantly across major cities, from 33.3% in Brisbane – one of the lowest rates recorded – to a more moderate 50.6% in Melbourne. Meanwhile, Perth and Adelaide registered clearance rates of 40%, while Canberra lagged behind at 47.1%. The decline is a broad-based challenge, affecting numerous regions beyond just individual cities.
Commenting on the situation, Annabelle Mezieres, economist at Cotality, suggested that auction volumes are likely to decrease further in coming weeks due to both seasonal patterns and weakening selling conditions. This assessment was supported by data showing nearly a quarter of scheduled auctions were withdrawn, with approximately 48% of properties sold before reaching the auction block.
The Reserve Bank of Australia's decision to keep interest rates steady at 4.35%, despite expectations of a rise, has done little to alleviate concerns for mortgage holders struggling with increased repayments. RBA Governor Michele Bullock's warning that further rate hikes remain possible if inflation continues to rise too quickly adds another layer of uncertainty for prospective homebuyers and existing property owners.
The proposed overhaul of the capital gains tax discount and negative gearing, set to be debated by lawmakers, has added fuel to the fire. Deputy Liberal leader Jane Hume labelled the plans "entirely unfair", while Minister Tanya Plibersek argued they aim to assist first-time buyers by slowing house price growth rather than causing a downturn. However, Greens Senator David Shoebridge claimed that auction results demonstrate a "broken" market, where affordability remains a significant barrier for many Australians.