Australia’s housing market looks to be entering a major correction phase amid collapsing buyer demand.
Last week’s final auction clearance rate plummeted to 47.3% across the combined capital cities, the second week in a row where the clearance rate was below the 50% mark and the lowest result since April 2020, during the depths of the pandemic.
Melbourne’s final auction clearance rate fell to 47.4%, its lowest result since September 2020:
Sydney’s final auction clearance fell to 49%, the city’s equal lowest result since April 2020:
Brisbane’s final auction clearance plunged to only 34.1%, the city’s lowest result since April 2020.
“Broadly, the weighted average clearance rate has been on a steady downtrend since late February 2026”, Cotality noted.
“After reducing to 55.3% in the week ending 3 May, the clearance rate slipped to 49.0% by the end of May and has now dropped to 47.3% in the first week of June; well below the decade average of 64%”.
As illustrated below by AMP chief economist Shane Oliver, the slumping auction clearance rate comes alongside falling consumer sentiment.
The Westpac-Melbourne Institute ‘House Price Expectations’ sub-index plunged by 14.9% in June. The ‘Time to buy a dwelling’ sub-index also remains heavily depressed.
Meanwhile, the quarterly “wisest place for savings” responses also reported a historic collapse in confidence in real estate, with a record low 4.5% choosing that asset class, down from a long-run average of 24%.
It is little wonder, therefore, why Australian dwelling values are falling, led by Sydney and Melbourne.
The combination of rising mortgage rates, growing for-sale listings, plummeting confidence, and the federal budget’s changes to negative gearing and capital gains tax are kryptonite for home prices.
