National auction clearance rates in Australia have fallen below 50% [1], with the latest figure dipping to 47.9% [2].
This decline signals a cooling of the property market as buyers react to rising borrowing costs. The shift suggests a growing gap between seller expectations and what buyers are willing to pay in a high-interest environment.
REA Group Senior Economist Angus Moore said the trend is a result of three recent Reserve Bank of Australia rate hikes [1]. These hikes have reduced buyer sentiment and impacted home-price expectations across the country.
"That’s clearly weighing on home prices, it’s weighing on sentiment, that’s showing up in market conditions," Moore said.
Moore said the market is also reacting to the anticipation of future monetary policy changes. He said, "The fact we're expecting further rate hikes is probably factoring in as well."
The decline has been observed over the past five weeks [1]. However, some analysts suggest the specific timing of the latest dip may be linked to calendar events. REA Group senior economist Anne Flaherty said the drop coincided with Anzac Day celebrations [2].
Flaherty said, "We do often see a bit of a change when we have a public holiday, but if we look at the last couple of weeks before that…"
Despite the potential impact of the public holiday, the broader trend reflects a tightening market. The combination of realized rate increases, and the fear of additional hikes, continues to dampen investor appetite for new property acquisitions.
“National auction clearance rates in Australia have fallen below 50%”
The drop in clearance rates indicates a shift in leverage from buyers to sellers. As the Reserve Bank of Australia maintains a restrictive monetary policy to combat inflation, the increased cost of debt reduces the maximum loan size for buyers, naturally capping price growth and increasing the number of properties that fail to sell at auction.
