Fewer than half the homes taken to auction across Australia’s capital cities sold last week, exposing the depth of the pullback in buyer demand as the prospect of another interest rate rise grows.
Cotality’s final weighted clearance rate fell to 48.2 per cent for the week ending August 23, down from 48.9 per cent the previous week and five percentage points below the preliminary reading of 53.2 per cent.
It was the 12th week out of the past 13 in which the combined-capital rate remained below 50 per cent. At the same time last year, about seven in every 10 homes taken to auction sold.
The deterioration has occurred despite fewer properties being offered. There were 1,390 auctions last week, 8.9 per cent more than the previous week but 32.7 per cent below the 2,066 held a year earlier.
That combination is difficult for sellers: fewer properties are going to auction, yet a larger share of them are failing to sell.
Cotality economist Annabelle Mezieres said rising advertised stock and subdued clearance rates were giving buyers more choice and greater room to negotiate. Vendors who secured a sale were generally showing a willingness to meet current market prices.
Cotality’s clearance rate includes properties sold before, during or after auction and counts passed-in and withdrawn properties among known results. The company says it collects an average of 99 per cent of auction results, making the final rate a more complete measure than the preliminary weekend figure.
Melbourne remained the country’s largest auction market, with 594 homes taken to auction. Its clearance rate slipped from 52.9 per cent to 51.9 per cent, while volumes were 39.7 per cent below the same week last year.
Sydney recorded the only week-on-week improvement among the capitals. Its clearance rate rose from 47.1 per cent to 50.3 per cent as auction numbers increased from 410 to 477. Even so, Sydney’s clearance rate remained 21.3 percentage points below last year and volumes were down 34.6 per cent.
Conditions were weaker outside the two largest markets. Adelaide cleared 46.7 per cent of 90 auctions, while Canberra recorded 40.9 per cent across 66 auctions.
Brisbane had the weakest result among the capitals with a substantial sample, clearing only 32.7 per cent of 151 auctions. That was down from 62.5 per cent a year earlier.
The subregional results revealed sharp differences within Sydney and Melbourne. Melbourne’s west recorded a clearance rate of 42.4 per cent across 92 auctions, with 39 properties selling and 53 failing to clear.
The clearance rate was 45.7 per cent in Melbourne’s inner east and 48.9 per cent in the inner south. The outer east was considerably stronger at 81 per cent.
Parramatta recorded a 40 per cent clearance rate from 30 reported results, while Ryde cleared 32 per cent. North Sydney and Hornsby had one of Sydney’s strongest results at 63.4 per cent.
Auction activity is expected to rise during the final week of winter, with 1,543 homes scheduled across the capitals. That is about 11 per cent more than last week but remains 29.5 per cent below the corresponding week of 2025.
Melbourne has 630 auctions scheduled, 41.8 per cent fewer than a year ago. Sydney’s scheduled volume will rise to 599 but remains 26 per cent lower annually.
Adelaide and Brisbane are moving against the national decline in volumes. Adelaide has 108 auctions scheduled, 4.9 per cent more than a year ago, while Brisbane’s 149 scheduled auctions are 21.1 per cent higher.
Cotality expects activity to ease during the first fortnight of spring, with slightly more than 1,450 auctions scheduled for the week ending September 6 and about 1,440 the following week.
The weak clearance figures arrive as interest rate expectations move rapidly in the opposite direction.
Commonwealth Bank and NAB have joined ANZ in forecasting another RBA increase this year after July’s underlying inflation rate remained at 3.6 per cent. NAB expects an increase in September, with the risk of another in November. CBA and ANZ expect a November rise, while Westpac continues to forecast no further change this year.
Financial markets now assign a 50 per cent probability to a September increase, up from 17 per cent before the inflation figures. About 30 basis points of additional tightening is priced by February 2027.
The auction figures strengthen the case for caution raised by economist Stephen Koukoulas, who has questioned the cost of tightening further while unemployment, wages and housing wealth are already weakening.
The housing downturn is no longer confined to auction results. Cotality’s national Home Value Index fell 0.7 per cent in July, its largest monthly decline since December 2022. Sydney values fell 1.4 per cent and Melbourne declined 1.2 per cent.
The Reserve Bank has also acknowledged that home prices are falling in some capitals and new housing loan commitments have declined sharply, particularly among investors. It expects housing credit growth to slow further as previous rate increases continue to work through the economy.
Auction results do not cover the entire housing market and are concentrated heavily in Melbourne and Sydney. But the scale of the annual decline in both volumes and clearance rates is consistent with falling prices, rising advertised stock and weaker housing finance.
A further rate rise may be required if the RBA concludes that inflation is no longer easing quickly enough. Property weakness alone would not prevent the bank from acting.
But another increase would meet a housing market that is already responding to tighter credit and weaker confidence. Sellers heading into spring face fewer active buyers, more competing stock and a growing risk that borrowing capacity will be cut again.
A year ago, seven in 10 auction properties sold. Now fewer than five in 10 are clearing, even before the next possible rate rise.
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