The Sydney property market is experiencing a significant downturn, with as many as three in five homes failing to sell at auction over the past week. This marks the worst auction result since 2022, prompting warnings from experts that sellers may need to slash prices to attract buyers.
According to SQM Research founder Louis Christopher, the final clearance rate for Sydney is expected to settle around 40%, following an unusually high number of unreported auction results. “The total sold reported was quite weak compared to what was listed, and will be the weakest since 2022,” he said, explaining that agents are often hesitant to report poor outcomes.
This bleak forecast comes in stark contrast to CoreLogic’s preliminary clearance rate of 70.5%, the highest in five weeks. However, as more data is updated, that figure is likely to drop.
The pattern of falling clearance rates is not limited to Sydney. Melbourne’s auction market has also struggled, with sellers eventually accepting lower prices to secure deals. Despite a reported clearance rate of 69.2%, a deeper dive into the data shows Melbourne housing values have declined by 1.1% over the past three months, making it more attractive for buyers.
Ray White chief economist Nerida Conisbee noted that while auction clearance rates may seem high, they mask a softening market. “Melbourne is now a good market for first-home buyers as pricing has come down, giving them more time to buy,” she said, pointing out that vendors are becoming more realistic about their expectations.
Despite the broader market challenges, there are still standout sales in Sydney. A one-bedroom apartment in Coogee sold for $855,000, surpassing its reserve price of $825,000. Additionally, a three-bedroom house in Northmead fetched $1.5 million, $100,000 above reserve, after being on the market for the first time in over five decades.
Across other cities, the auction market was mixed. Brisbane saw the weakest clearance rate since April 2023 at 47.6%, while Adelaide recorded a stronger outcome with a 72% clearance rate, the highest in three weeks. Canberra reported a clearance rate of 55.6% from 71 auctions.
As Sydney continues to experience its weakest auction performance since 2022, buyers are likely to hold the upper hand in negotiations, with vendors being forced to reassess their pricing strategies.