Auction Clearance Rate Hits Three-Month Low as Housing Market Slumps

Australia's auction clearance rate has hit a three-month low, with less than half of homes sold at auction across the country last week. The preliminary clearance rate fell to 48.2 per cent, its lowest since late June.

The weak result comes off the back of long weekends in some states and the Reserve Bank's decision to lift interest rates for a fourth time this year. It also follows changes in this year's federal budget that sent shock waves through the property sector, including heavily restricted negative gearing, and in many cases higher capital gains tax for sellers.

Sydney and Melbourne "have been a drag on the national result", according to Tim Lawless, research director at property research firm CoreLogic. In Sydney, 304 auctions were held in the past week, down 61 per cent from the week before. It was also a 38.5 per cent drop compared to a year ago.

There were 670 auctions held in Melbourne, a 136 per cent jump compared to the previous week when the city was having the AFL grand final long weekend. But in the past 12 months, the number of auctions held in Melbourne has dropped 45.6 per cent, the largest decline of any capital city.

"Homes are taking longer to sell, auction clearance rates have held below average and advertised stock levels have risen across many markets," Mr Lawless said.

Another real estate analysis firm, SQM Research, released new data showing some homes were sitting unsold on the market for as long as six months. Homes that sat unsold for more than 180 days were clogging the market, with 10.5 per cent more older listings compared to a year ago.

"The bulk of the increase is property that has been on the market for one to six months and hasn't sold," SQM research director Louis Christopher said. "In Sydney, fewer vendors are listing than a year ago, yet total stock is up almost a fifth. That's a demand problem, not a supply surge."

Forced sales are on the rise, with SQM's figures showing there were 4,872 distressed sales across Australia in September, a 29 per cent jump compared to the same period last year. Brisbane and Adelaide have had the largest increase in the number of properties available for sale, up 43.5 and 39.5 per cent respectively.

Mr Lawless said Australian households were "deeply pessimistic" about the cost of living crisis, interest recent hikes and the budget's changes to property taxes creating "less favourable conditions".