Auction Clearance Rate Slumps to 57 Per Cent as Rate Hikes and Iran War Weigh on Buyers
National clearance rate hits lowest point this year with Sydney at 55 per cent and listings at highs not seen since 2021
Data from Cotality shows surging numbers of homes are being passed in at auction, while the number of properties listed for sale has hit highs not seen since 2021. The combination of rising supply and falling demand is shifting the balance of power toward buyers for the first time in years.
Buyers' agents report that confidence has been hammered by a double blow: interest rate hikes that have increased mortgage costs, and the broader economic impact of the Iran war driving up prices across the economy from fuel to groceries. The result is that many potential buyers are sitting on their hands, waiting for either rates to fall or prices to adjust.
The slump comes at a time when many homeowners are choosing to sell, either to lock in gains before prices fall further or because rising mortgage payments are becoming unmanageable. This is creating a feedback loop where more listings and fewer buyers push clearance rates lower, which in turn discourages more buyers from entering the market.
Analysis
Why This Matters
A sustained drop in auction clearance rates below 60 per cent has historically been a reliable leading indicator of price declines in Australian property markets. At 57 per cent nationally and 55 per cent in Sydney, the market is firmly in correction territory.
Background
Australian property prices surged during the post-COVID period of ultra-low interest rates. The Reserve Bank has since raised rates multiple times, and the Iran war has added inflationary pressure that makes further cuts unlikely in the near term.
Key Perspectives
For prospective buyers, falling clearance rates could eventually mean better deals. For existing homeowners, particularly those who bought at the peak, the combination of higher mortgage costs and declining values is a serious concern. The 2021 comparison for listing volumes is significant — that was the last time supply was this high, and it preceded a period of price growth, but conditions were very different then.
What to Watch
Whether clearance rates stabilise or continue to fall through autumn, and whether the RBA signals any relief on rates at its next meeting.