Australian auction sales fall below half as buyer confidence weakens
Fewer than half of Australian homes put up for auction sold over the past week, reflecting a sharp loss of buyer confidence as borrowing costs rise and lenders become more cautious. The downturn matters because house prices have fallen across every capital city for the first time in 15 years, while economists say further declines may lie ahead.
Cotality recorded a national auction clearance rate of 48.4 per cent, down from more than 70 per cent in February; Sydney’s rate was 48.2 per cent, Melbourne’s 54.8 per cent and Brisbane’s 25.2 per cent. Domain reported prices fell a record 4.7 per cent nationally in the September quarter, including a 7.4 per cent drop in Perth, while the Reserve Bank has kept a November rate rise in play amid persistent inflation concerns.
In short
- National auction sales fell below half of properties offered.
- Clearance rates have dropped from over 70 per cent in February.
- House prices fell a record 4.7 per cent in the quarter.
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The case for
The sharp fall in auction sales and prices suggests housing has become less affordable and buyers are wary of taking on large loans as borrowing costs rise. Further price declines could make homes more accessible to first-time buyers and reduce the risk of households stretching themselves financially.
The case against
A weakening housing market can erode homeowners’ savings and leave recent buyers owing more than their homes are worth, while failed sales may make it harder for people who need to move. Higher borrowing costs and tighter lending can also curb construction and spending, potentially deepening the downturn and its wider economic effects.
Explained simply
Australia’s housing market includes homes sold at auction, where buyers compete by bidding on a set day. Clearance rates show the share of auctioned homes that sell, and can offer a snapshot of buyer demand.
The Reserve Bank of Australia sets interest rates, which affect mortgage costs, while lenders decide how readily to offer loans. Higher borrowing costs and tighter lending can make buyers more cautious, affecting both auction sales and home prices.
Changes in home prices matter to people buying, selling or borrowing against property, and can affect household finances more broadly. Economists watch these trends to assess how housing conditions may develop.
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Originally published by Daily Mail as “Australian housing market takes another hit as fewer than half of properties up for auction sell”.