By now you’ve probably seen the headlines comparing Australia’s latest auction clearance rates to the depths of the COVID pandemic. But according to Domain Chief of Research and Economics Dr Nicola Powell, that’s only half the story.
The bigger shift isn’t that buyers have disappeared – it’s that confidence has. And as uncertainty keeps purchasers on the sidelines, vendors are increasingly choosing to pull their properties from auction rather than accept the market’s new reality.
Domain’s latest weekend auction snapshot recorded a national preliminary clearance rate of 48 per cent across 2,079 scheduled auctions on Saturday, June 20, down sharply from the 66 per cent achieved during the same weekend last year.
A total of 996 properties sold, generating almost $489 million in transactions, while 370 listings were withdrawn before auction day and a further 313 properties were passed in, meaning almost one in three reported campaigns failed to reach a successful conclusion.
Dr Powell said the figures reflected a market where confidence had become the dominant force influencing buyer behaviour, rather than a collapse in underlying demand.
“Buyers haven’t disappeared. They’re just more cautious. They’re more selective, and some of them are just waiting,” she said.
She said a combination of global economic uncertainty, affordability pressures, higher interest rates and the Federal Government’s proposed tax reforms had created an environment where many buyers were choosing patience over urgency.
“When we think about dynamics in our housing market, it is very much shaped by confidence. We’ve got economic uncertainty, not only domestically but globally.
“We’ve got policy changes that are coming through from the budget, affordability and three rate hikes this year. All of that together creates uncertainty and impacts confidence in a negative way,” Dr Powell said.
Rather than rushing to secure a property, buyers are now taking a far more disciplined approach, with many believing better value will emerge if they wait for the market to soften further.
“Buyers are price sensitive, and they’re very focused at the moment on value and not overpaying. There are buyers out there waiting because they think prices are going to fall,” she said.
That shift in buyer sentiment is now forcing vendors to rethink their own strategies. Instead of pushing ahead with auctions in weaker conditions, an increasing number of sellers are withdrawing their homes altogether rather than risk failing to meet reserve.
Dr Powell said the growing number of withdrawals showed many vendors were yet to adjust their price expectations to today’s market.
“Reserve pricing isn’t aligned to today’s market. Listings are rising, buyers know that, and we’ve got sellers that are just not even going to the auction setting because they don’t have the buyer depth,” she said.
The trend is becoming increasingly pronounced, with withdrawn auctions reaching levels not seen in years.
“In May we were seeing almost 26 per cent of auctions withdrawn. That is massive,” Dr Powell said, describing it as another sign that confidence, rather than demand, was now dictating market activity.
Sydney continues to illustrate the changing market dynamic more clearly than anywhere else. The Harbour City recorded a preliminary clearance rate of 47 per cent from 865 scheduled auctions, with 213 properties withdrawn before auction day as buyers and sellers struggled to find common ground.
Dr Powell said Sydney’s stretched affordability and sensitivity to interest rates had left buyers particularly reluctant to commit.
“Sydney is rate sensitive. We’ve got stretched affordability, investors probably sitting on the sidelines and owner occupiers wanting to wait because they think prices are going to fall,” she said.
“We are very much in falling price territory now.”
Melbourne proved the most resilient of the major capitals, recording a preliminary clearance rate of 52 per cent from 881 scheduled auctions despite easing from 66 per cent a year earlier.
Vendors withdrew 115 Melbourne properties before auction, while Brisbane recorded the sharpest slowdown of any capital, with its clearance rate falling to just 20 per cent after 18 withdrawals and 52 passed-in properties. Canberra finished the weekend with a 41 per cent clearance rate, while Adelaide recorded 54 per cent, also down on the 67 per cent achieved during the same weekend last year.
While conditions are expected to remain subdued in the near term, Dr Powell believes the market will eventually find its footing as sellers adjust their expectations and interest rate settings begin to improve.
“I think we’re in for a period of slow activity and weakening prices,” she said.
“Eventual rate cuts will give that revival. Investors in particular react before the first rate cut because they want to capture the market at the bottom and get in before prices rise.”