What’s driving the drop in auction clearance rates?

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After years of fierce competition and fast-rising prices, the market is shifting. Clearance rates have dipped below 50% nationally — and for prepared buyers, that creates a different set of opportunities.

Key fact: In Sydney and Melbourne, auction success rates have dropped to their lowest levels in years — with more properties passing in and moving to private negotiation.

  • Federal Budget tax changes

    Negative gearing for residential property will generally be limited to new builds from 1 July 2027, and the 50% CGT discount will be replaced with cost base indexation and a 30% minimum tax rate on gains. Existing investments held at 7:30pm AEST on 12 May 2026 are grandfathered. These changes have cooled investor demand and reduced competition at auction.

  • Buyer caution and shifting expectations

    Buyers are taking longer to evaluate their options and are more selective about price. At the same time, some vendors are still adjusting to the new market reality — creating a gap in expectations that is showing up in auction results, with more properties being passed in and moved to private negotiation.

  • Three interest rate rises this year

    The cash rate has increased three times in 2026. Higher rates reduce borrowing capacity and dampen consumer confidence — meaning fewer competitive bidders at auction, and vendors finding it harder to reach their reserve price.

  • What this means for buyers

    A cooler market means less pressure, fewer bidding wars and more room to negotiate on price and terms. Buyers who have been sitting on the sidelines may find more choice and a more considered environment to act in. Properties taking longer to sell also means more time to do your research and secure finance — without the pressure of a tight auction timeline.

  • One thing that hasn’t changed: auctions are unconditional

    If you’re planning to bid at auction, your finance needs to be in order before you step foot on the property. There’s no cooling-off period and no subject-to-finance clause — if your bid wins, you sign and pay a 10% deposit on the day. Getting pre-approved is essential.

Whether you’re actively looking or just watching the market, knowing your borrowing capacity puts you in a stronger position to act when the right property comes along.

Talk to us about your finance options