Australia's preliminary auction clearance rate falls to 54 per cent as Sydney and Melbourne property markets cool

Australia’s preliminary auction clearance rate fell to 54% nationwide, with Sydney and Melbourne leading the downturn. Sydney’s clearance rate stood at 52.8% for the week ending Sunday, while Melbourne’s rose slightly to 57.6% from 52.3% the prior week. Both cities saw sharp declines when finalized, with Sydney’s rate dropping to 48.9% and Melbourne’s to 47.4%. The cooling market reflects broader trends, including reduced buyer demand due to higher interest rates and three consecutive months of falling home prices in Sydney and Melbourne. REA Group executive manager Angus Moore noted that auction activity has softened since autumn, driven by lower demand, increased supply, and competitive pressure. Government reforms targeting capital gains tax (CGT) discounts and negative gearing are also impacting investor behavior. Critics, including ANU professor David Stern and Momentum Wealth founder Damian Collins, argue the changes will discourage investment, reduce housing supply, and increase rental costs. Collins warned the reforms could disrupt the market without improving affordability, urging a more gradual approach. REA Group’s modeling predicts home prices will dip further before stabilizing, with gradual growth expected in the medium to long term. While short-term turnover may rise slightly, new supply is not anticipated to increase immediately, with significant growth projected only in five years. The reforms are expected to influence investor activity before the end of the next financial year.