Australia’s housing market appears to be entering a major correction phase amid a slowdown in buyer demand.
Last week’s final auction clearance rate fell to 47.3 percent in the capital cities overall, the second week in a row where the clearance rate was below 50 percent and the lowest result since April 2020, during the depths of the pandemic.
Melbourne’s final auction clearance rate fell to 47.4 per cent, its lowest result since September 2020:
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Sydney’s final auction approval fell to 49%, the city’s lowest result since April 2020:
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Brisbane’s final auction approval fell to just 34.1 per cent, the city’s lowest result since April 2020.
“Broadly speaking, the weighted average clearance rate is on a steady downward trend from the end of February 2026”, Cotality noted.
“After falling to 55.3 percent in the week ending May 3, the clearance rate fell to 49.0 percent by the end of May and has now fallen to 47.3 percent in the first week of June; well below the decade average of 64 percent”.
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As AMP Chief Economist Shane Oliver explains below, auction clearance rates coincide with falling consumer sentiment.
The Westpac-Melbourne Institute ‘House Price Expectations’ sub-index fell 14.9% in June. The ‘Time to Buy Home’ sub-index is also heavily depressed.
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Meanwhile, responses to the quarterly “wise place to save” also reported a historic drop in confidence in real estate, with a record low 4.5% choosing the asset class, below the long-term average of 24%.
So it’s no surprise why Australian residential values are falling, led by Sydney and Melbourne.
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The combination of rising mortgage rates, rising for-sale listings, declining confidence, and negative gearing of the federal budget and capital gains tax changes are kryptonite for home prices.
