Auction Clearance Rates Are Falling Fast: Is Australia's Property Market Shifting in Favour of Buyers?

The Auction Market Is Sending a Clear Signal

Australia’s auction market is cooling, and it’s cooling quickly. In mid-March 2026, Sydney recorded a final clearance rate of just 58.6%, the lowest of the year and well below the 64.0% recorded in the same weekend of 2025. Melbourne came in at approximately 61%. Brisbane posted 39%.

At the same time, the number of properties being listed for auction is surging. In the week ending 15 March 2026, 2,871 homes were scheduled for auction nationally, a 58% jump on the previous week and 16% higher than the same period last year, according to Cotality (formerly CoreLogic).

More properties for sale. Fewer buyers willing to pay asking prices. This is what the early stages of a market shift look like.

But before anyone declares a buyer’s market, there’s nuance here. Clearance rates are falling from historically strong levels. The underlying supply shortage hasn’t resolved. And Australia’s deep cultural attachment to property ownership means demand tends to bounce back faster than economists expect.

Here’s what’s happening, why it matters, and what buyers, sellers, and investors should do about it.

What Auction Clearance Rates Tell Us

Auction clearance rates are one of the most closely watched indicators of property market health in Australia, particularly in Sydney and Melbourne where auctions dominate the sales landscape.

The clearance rate measures the percentage of properties taken to auction that sell, either under the hammer or before auction day. It’s calculated weekly by data providers including Cotality and Domain.

How to Read Clearance Rates

When clearance rates are high, sellers have the power. Multiple bidders compete, prices get pushed above reserves, and properties sell quickly. When rates drop, the dynamic shifts. Properties pass in, vendors have to negotiate, and buyers gain leverage.

At 58.6% in Sydney and 61% in Melbourne, we’re entering balanced-to-buyer territory for the first time in 2026.

Why Are Clearance Rates Falling?

Three forces are converging to cool the auction market.

1. Back-to-Back RBA Rate Hikes

The Reserve Bank of Australia raised the cash rate by 0.25% in both February and March 2026, taking it to 4.1%. This is the first time the RBA has hiked at two consecutive meetings since early 2023.

For borrowers, the impact is immediate and tangible:

Based on a 30-year principal and interest loan at a variable rate of approximately 6.4%.

These aren’t enormous amounts in isolation, but they come on top of the cumulative rate increases since May 2022. A borrower who took out a $750,000 mortgage at the start of the hiking cycle is now paying roughly $1,800 more per month than they were three years ago.

RBA Governor Michele Bullock signalled that further hikes are possible if inflation doesn’t moderate. The major banks now expect another 0.25% increase in May, which would be the first time the RBA has hiked at three consecutive meetings since March 2023.

The uncertainty alone is enough to make prospective buyers pause. Why bid aggressively at auction this weekend when rates might be even higher next month?

2. Listings Are Flooding the Market

Sellers appear to be rushing to market, sensing that the window for maximum prices may be closing.

“The pick-up in new listing numbers is partly seasonal but also probably reflects an element of vendors aiming to get into the marketplace before selling conditions potentially worsen as interest rates rise and buyer demand reduces,” said Cotality research director Tim Lawless.

The data supports this:

• Total new listings in the week ending 15 March 2026 were up 16% year-on-year
• Total stock on market (all active listings) has been climbing since January 2026
• Sydney and Melbourne are seeing the sharpest increases, with listings up 20%+ in some suburbs

More supply with the same (or weakening) demand means less competition per property, which directly pressures clearance rates downward.

3. The CGT Discount Speculation

A wildcard that’s particularly affecting investor sentiment is the growing speculation about capital gains tax (CGT) reform in the May 2026 federal budget.

Media reports suggest the government is considering cutting the CGT discount from 50% to 25%, which was Labor’s policy at the 2016 and 2019 elections. Morgan Stanley noted that similar proposals ahead of the 2019 election contributed to a 10% national decline in house prices, even without any change in the RBA cash rate.

While no formal announcement has been made, the mere possibility is enough to spook investors. If the CGT discount is halved, the after-tax return on investment property falls significantly, which would reduce demand from investor buyers (who made up a significant portion of lending growth through 2025).

4. Geopolitical Uncertainty and Cost of Living

The Iran-US conflict has pushed fuel prices sharply higher, with unleaded petrol averaging $2.10 to $2.30 per litre in capital cities. Treasurer Jim Chalmers has acknowledged that higher oil prices could push inflation close to 5%, depending on the duration of the conflict.

Every fill-up at the bowser reminds consumers of the financial pressure they’re under. When people feel financially stretched, big-ticket purchases like property get postponed.

City-by-City Breakdown: Where the Market Is Cooling

Sydney

Sydney’s clearance rate of 58.6% for the week ending 8 March (final figures) was the weakest of 2026. Regional variations within Sydney are stark:

• Northern Beaches: Clearance rates above 80%, driven by lifestyle demand and limited stock
• Inner East: Among the weakest sub-markets, with higher price points limiting buyer depth
• Central Coast: Around 36%, the weakest sub-region
• Western Sydney: Holding up relatively well due to affordability advantages and infrastructure investment (metro west, new airport)

The median auction house price in Sydney sits at approximately $1.84 million. At a 6.4% variable rate with a 20% deposit, monthly repayments on the median Sydney house are roughly $9,200. That requires a household income of approximately $280,000 to service comfortably (using the standard 30% of gross income benchmark).

Melbourne

Melbourne’s clearance rate came in around 61%, slightly above Sydney. But Melbourne’s market has been structurally weaker for longer, with home values essentially flat over the past 12 months.

Regional patterns:

• Inner East: Weakest clearance rates, reflecting premium pricing pressure
• Northern suburbs: Moderate performance around 60-65%
• Outer growth corridors: Stronger relative performance due to affordability

Melbourne’s property market has been weighed down by higher new supply (particularly apartments), weaker interstate migration compared to Brisbane and Perth, and pandemic-era behavioural shifts that saw many residents relocate to regional Victoria or interstate.

Brisbane

Brisbane recorded a low 39% auction clearance rate, but this requires context. Queensland’s property market is dominated by private treaty sales, not auctions. A low clearance rate in Brisbane doesn’t carry the same significance as in Sydney or Melbourne, where auctions are the primary sales method.

Brisbane’s underlying market remains strong, with 99.5% of house resales turning a profit and median profits growing 22.9% annually, according to Domain’s March 2026 Profit and Loss Report.

Adelaide

Adelaide posted a 66% clearance rate, one of the strongest nationally. South Australia’s market continues to benefit from relative affordability, strong interstate migration, and limited housing supply. Adelaide remains a seller’s market.

Canberra

The ACT recorded 53% clearance, reflecting cautious buyer behaviour linked to public sector employment uncertainty. Canberra was also the only capital to record a decline in the share of profitable resales in Domain’s latest report.

What This Means for Buyers

If you’ve been trying to buy and getting outbid at every auction, the market dynamics are shifting in your favour. Here’s how to capitalise:

Negotiate After Auction

When a property passes in at auction (fails to meet the reserve price), the highest bidder gets the first right to negotiate with the vendor. In a falling clearance rate environment, more properties are passing in, which means more negotiation opportunities.

Properties that pass in typically sell for 3-7% below the vendor’s initial expectations, according to historical data from SQM Research. On a $1 million property, that’s $30,000 to $70,000 in potential savings.

Take Your Time (But Be Prepared)

More stock on the market means less urgency to bid aggressively. You can afford to attend multiple auctions, compare properties, and make considered decisions. But “taking your time” doesn’t mean being unprepared. Finance pre-approval, building inspections, and legal advice should all be in place before you start bidding.

Watch for Price Adjustments

Vendors who listed their properties expecting February-level demand may need to adjust their price expectations. Keep an eye on properties that have been listed for 30+ days without selling, they’re often the best negotiation targets.

Consider Private Treaty

In a cooling market, private treaty sales (where the property is listed with a price or price range rather than going to auction) can offer better value. You can make conditional offers (subject to finance, building inspection, etc.) and negotiate without the pressure of an auction room.

What This Means for Sellers

If you’re selling, the message is clear: price accurately and present well. The days of underquoting by 15% and watching a bidding war deliver a windfall are fading in most suburbs.

Set Realistic Reserves

The biggest risk for sellers right now is setting a reserve price based on comparable sales from three to six months ago. The market has shifted. Work with your agent to set a reserve based on current buyer sentiment, not peak-market comparisons.

Consider Pre-Auction Offers

In a weakening auction environment, a strong pre-auction offer might be worth accepting. A bird in the hand is particularly valuable when clearance rates are trending down.

Presentation Matters More Than Ever

When buyers have more choice, the quality of your property’s presentation, styling, photography, and marketing becomes the differentiator. In a seller’s market, a mediocre listing can still sell. In a balanced market, it sits.

Timing Is Important

Cotality expects strong listing volumes to continue through autumn, with another surge before Easter. If you’re planning to sell, acting sooner rather than later may be advantageous. Waiting risks an environment of even more supply and potentially higher interest rates.

What This Means for Investors

The investor segment faces the most uncertainty right now. Between rising holding costs (higher interest rates), potential CGT changes, and softening capital growth in key markets, the risk-reward equation is shifting.

Holding Costs Are Rising

With the cash rate at 4.1% and variable mortgage rates around 6.4%, the cost of holding an investment property is significantly higher than it was two years ago. On a $600,000 investment property with an 80% LVR, annual interest costs are approximately $30,700. If gross rental yield is 4%, that’s $24,000 in rent, meaning the property is negatively geared by approximately $6,700 per year before other expenses.

CGT Uncertainty

Until the May 2026 budget clarifies the government’s position on CGT discounts, investors face a significant unknown. If the CGT discount is reduced from 50% to 25%, the effective tax rate on a capital gain rises substantially:

This potential change is most significant for investors planning to sell in the short to medium term.

Where’s the Opportunity?

For investors with a long-term horizon and the financial capacity to weather short-term pain, falling clearance rates can create buying opportunities. Historically, the best time to buy property is when sentiment is negative and competition is low.

Key metrics to watch:

• Days on market: Rising days on market in specific suburbs signals softening demand
• Vendor discounting: Track the gap between listing prices and sale prices
• Rental yield: As purchase prices moderate and rents continue to rise (Domain expects rental growth to pick up in 2026), yields could improve for patient buyers

Historical Context: How Far Could Clearance Rates Fall?

To understand where we might be headed, it helps to look at historical precedent.

We’re still a long way from the 40% range of 2018-19. That downturn was driven by a combination of APRA lending restrictions, the banking royal commission, and proposed Labor tax changes (negative gearing and CGT reform). Two of those three factors are partially in play again (CGT speculation and rising rates), but APRA hasn’t tightened lending standards, and bank balance sheets remain healthy.

A more likely scenario for 2026 is clearance rates stabilising in the 55-65% range, representing a balanced market rather than a full downturn. But if the RBA hikes again in May and the government announces CGT changes, rates could test the low 50s.

The Bottom Line

Falling auction clearance rates are the property market’s early warning system. They’re telling us that the balance of power between buyers and sellers is shifting.

For buyers, this is an opportunity, perhaps the best buying conditions since late 2023. For sellers, it’s a wake-up call to price realistically and move quickly. For investors, it’s a moment to reassess risk, model different scenarios, and avoid making decisions based on the assumption that the 2024-25 growth rates will continue.

The property market hasn’t crashed, and given Australia’s structural supply shortage and strong population growth, a severe downturn remains unlikely. But the frothy conditions of the past 18 months are moderating, and that changes the strategy for everyone involved.

Talk to a Mortgage Broker About Your Options

Whether you’re a buyer looking to capitalise on a cooling market, a homeowner considering selling before conditions shift further, or an investor reassessing your portfolio strategy, a mortgage broker can help you understand your borrowing capacity, compare loan products, and structure your finance to suit the current environment.

Find a verified mortgage broker on WealthWorks to get tailored advice.