Preliminary auction clearance rates across the capitals have slipped below 50 per cent and have remained there for three straight weeks.
New figures from property analytics firm Cotality have revealed that the combined capital cities recorded a preliminary clearance rate of 49.8 per cent last week, only a fraction higher than the previous week’s 49.2 per cent.
Across the capitals, 1,447 homes went to auction, down sharply on the prior week and well below volumes recorded at the same time last year.
Cotality economist Annabelle Mezieres said the data pointed to a quieter auction calendar.
She said that the number of homes scheduled for auction had already stepped down, adding “auction activity is expected to soften further this week, with around 1,300 homes currently scheduled to go under the hammer”.
Tim Lawless, Cotality’s Asia‑Pacific executive research director, said the recent readings marked a soft patch for the auction market.
“The past three weeks have all been below 50 per cent,” he said and added that “it’s pretty rare to see clearance rates this low”.
Buyers and sellers struggle to meet on price
Lawless said the run of sub‑50 per cent clearance suggested a growing gap between vendor expectations and what bidders were currently prepared to pay.
“Clearance rates persistently holding this low shows a mismatch between buyer and seller expectations,” he said.
“It’s probably another indicator of the market going through a phase of negative movements,” he said, with “foundational challenges around affordability and serviceability, interest rate hikes, some pullback from investors post-budget, all those things combined” contributing to a softer environment for sales.
Beyond demand, Lawless pointed to changes on the supply side that were reinforcing the weaker clearances.
“We’re seeing advertised listing numbers rising which means there’s more supply in the marketplace and of course that means buyers have more choice,” he said.
“This takes urgency out of the market and gives them [buyers] more ability to negotiate.”
Looking ahead, Lawless expects the current pattern to persist.
“We’re in a housing market downturn and I don’t see any factors moving the market around,” he said.
Melbourne and Sydney cool, smaller capitals under pressure
Within the national picture, Melbourne remained the busiest auction market last week, yet still recorded weaker activity than earlier in the year.
The city hosted 582 auctions, a sizeable drop on the previous week and substantially lower than the same week in 2025, while its preliminary clearance rate rose to 54.5 per cent – the strongest result in three weeks.
Sydney also saw fewer auctions, with 563 homes going under the hammer, again down on both weekly and annual comparisons.
The harbour city’s preliminary clearance rate improved to 51.6 per cent after two weeks below 50 per cent.
Brisbane recorded 120 auctions, well below both the previous week and the same period last year and posted a preliminary clearance rate of just 23.8 per cent – its weakest reading since the early stages of the pandemic.
Adelaide’s auction volumes eased to 111, while its preliminary clearance rate dropped sharply to 45.7 per cent from nearly 70 per cent a week earlier, marking its second‑lowest result of the year.
Clearance collapse comes as mortgage demand shrinks
The fall in auction clearance comes on top of fresh figures from Equifax, which have shown mortgage growth swinging from solid expansion at the beginning of the year to a broad‑based contraction.
Overall mortgage demand was 10.7 per cent higher in January than a year earlier, yet slipped to a 0.9 per cent fall in April and then dropped 6.6 per cent in May.
First home buyer (FHB) activity has followed the same pattern but with a steeper drop‑off as rates have climbed.
New mortgages for FHBs were up 7.1 per cent in January, yet have since recorded a 9.1 per cent fall in May
Refinancing, which has been a key driver of mortgage flows through the rate‑hike cycle, is also fading.
Total refinancing demand was 12.4 per cent higher in January but was 5.6 per cent lower by May.
Addressing the Morgan Stanley Australia conference in Sydney on 10 June, Australia and New Zealand Banking Group CEO Nuno Matos said the combination of higher rates and housing‑specific tax changes would pull mortgage growth back from recent highs.
“We have no doubt the mortgage market will slow down. It has been growing at around 8–9 per cent before, it’ll probably grow at 5–6 per cent. That’s the short- to medium-term,” he said.
New data from Westpac has also revealed that new average mortgage application volumes for 3Q26 had dropped to 30,000 from 33,000 in 2Q26, with volumes after the federal budget falling again to 27,000.
The bank’s forecasts also point to slower growth across both investor and owner‑occupier portfolios.
Westpac expects total housing credit growth to ease from 6.5 per cent in financial year 2026 to 4.7 per cent in FY27, with the bank also forecasting investor credit growth to fall from 8.4 per cent in FY26 to 4.4 per cent in FY27.
[Related: Mortgage demand in ‘significant decline’]
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