The latest auction results from Australia’s biggest capitals suggest rising buyer interest and stronger competition, but not all buyers have a spring in their step.
Industry professionals say caution remains as the usually bustling selling season gets into full swing this month.
This comes as affordability remains a major hurdle for many Australians. Domain data shows the deposit gap has climbed above eight years for the median-income household, while mortgage repayments now consume more than half of disposable income.
Clearance rates in the auction capitals of Sydney and Melbourne have been gradually rising throughout the year on the back of three interest rate cuts. But Sydney-based buyer’s agent Dan Sofo says there are many markets, within markets, across the city, and that’s a key distinction to make.
“There are pockets of the inner west that are absolutely running so hot that some properties don’t even make it to auction,” Sofo told realestate.com.au. “But there are other pockets such as the eastern suburbs that are sluggish with a lot of nervous buyers and sellers.
“Then there are suburbs in the middle ring that have been running red hot, especially with houses around the median, that’s $1.2m to $1.5m.”
Sydney auctioneer Clarence White said he’s seeing a moderate uptick in buyer confidence and activity, but it’s more gradual than explosive.
“Overall, the market remains price cautious and price sensitive,” White said. “Assuming anticipated further rate cuts do eventuate, we would expect a gradually strengthening market.”
Auction clearance rates in Melbourne are sitting at a two-year high as confidence builds that the city’s underperforming housing market has turned a corner.
Enquiry activity on realestate.com.au shows buyer demand in Melbourne has strengthened across more than 90% of its suburbs, with enquiries up on average 23%.
Melbourne is now the third most affordable capital city for housing, ahead of only Darwin and Hobart, following years of lagging price growth.
Melbourne buyer’s agent Carly Susic said she’s seen more interstate investors trying to capitalise on the city’s slower pace.
“We’ve come out of a pretty low-speed market and it’s patchy,” Susic told realestate.com.au. “I wouldn’t say it’s a strong market at this stage – it feels like a recovery mode. Buyers are still being a bit picky. They’re out there and looking but to some degree the confidence hasn’t returned.
“We’re seeing more than one buyer but there’s still that gap between the vendor’s expectations against where the buyer is sitting.”
Forward-looking demand data signals some of the previously underperforming capital cities are now experiencing a resurgence in enquiries.
REA Group senior economist Eleanor Creagh said this matters because expectations can be self-fulfilling.
“Markets are not only about fundamentals but also about expectations,” Creagh said. “Lower mortgage rates are central to this shift. Recent interest rate cuts have boosted borrowing capacity and reduced monthly repayments, giving buyers greater confidence to stretch budgets.”
Stock constraints are adding to the competition. Nationally, new listings were down 8% year-on-year in July, with Melbourne down 9% and Sydney 5% lower. Brisbane’s total stock has also slumped 8% on year-on-year.
Chief auctioneer David Holmes said this is evident in Brisbane.
“I think Brisbane is leading the charge when it comes to momentum at the moment,” Holmes said. “Our auction numbers are very solid. Last week we had a limited number of auctions at around 143 on the weekend, due to a dip in stock at the moment.
“Auctions are proving very popular again and it’s very hard to price things in a rising market. But we just can’t get our hands on enough stock at the moment, that’s the issue.”
With three RBA rate cuts delivered this year and further reductions expected, experts say momentum could strengthen further into spring.
“Borrowing costs are easing, sentiment has improved, and demand is rebuilding as we head into the spring selling season,” Creagh said. “Auction clearance rates have strengthened and nationally enquiries per listing are at a three-year high, signalling that there is renewed competition.”
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