The housing market in Australia is experiencing a slowdown, and it's not just a case of FOMO (fear of missing out) anymore. The national auction clearance rates are hovering around 50%, and open home turnout is at record lows. While the rate of decline has plateaued, the data reveals a distinct shift in buyer attitudes: urgency has vanished, replaced by caution. This is a significant change from the previous market dynamics, where buyers were often driven by a sense of urgency to secure a property. Now, the market is characterized by a more measured and cautious approach.
The Cotality data shows a slight improvement in the national auction clearance rate, rising to 50% this week from 48.5% last week. However, this figure is still low and marks a departure from the higher clearance rates seen in previous months. The research director at Cotality, Tim Lawless, attributes this minor shift to a lower withdrawal rate, indicating that fewer auctions are being pulled from the market. Despite this, auction volumes remain subdued, with a 4.7% increase in the number of auctions this week compared to the previous week, but still 12.6% lower than the same period last year.
The state-by-state breakdown reveals varying trends. Melbourne, the auction activity leader, saw a 4.0% increase in auctions this week compared to last week, but it was still 10.7% lower than a year ago. Sydney, another key market, hosted 444 auctions, level with last week, but 24.1% lower than a year ago. Brisbane, on the other hand, experienced a 25.4% increase in auctions, but the clearance rate remained low at 35.9%. Adelaide and Canberra also saw a decline in auction activity, with 28.6% and 30% decreases, respectively.
The slowdown in the housing market is not limited to auction activity. Open homes have also become quieter, with average attendance falling to 2.1 people per open home over the four weeks to July 11, down from 3.6 the previous year. This decline follows three interest rate increases by the Reserve Bank of Australia, pushing the official cash rate to 4.35%. The difficult backdrop for buyers, including rising interest rates, consumer sentiment, and uncertainty in the Middle East, has contributed to the market slowdown.
However, some experts argue that the slowdown was already underway before the government's budget changes. Ray White chief economist Nerida Conisbee notes that the property slowdown predates the budget changes, with attendance at open homes falling to 2.6 people per open home by May, 22% lower than a year earlier. She suggests that the broader market trend is driven by macroeconomic factors, including higher borrowing costs, weak confidence, and broader uncertainty.
Despite the quieter market, experts emphasize that the market is not sinking. A property only needs one buyer, and well-priced homes can still attract strong competition. The slowdown points to a less frantic market, with buyers under less pressure to act quickly. As the market heads into the spring selling season, all eyes will be on how it performs, with the potential for a more measured and cautious approach to buying and selling properties.
