Auction clearance rate slumps to 57% nationwide as interest rate hikes prompt Australians to sell | Housing

An increasing number of homes are being sold at auctions as high interest rates suppress demand and the number of properties for sale reaches highs not seen since 2021.

According to Cotality data, the national auction approval rate last week was just under 57%; this was the lowest level of the year; In Sydney the rate was 55%. The remainder includes both homes that were not sold at auction and homes that were withdrawn before the auction.

The national rate remained at or near 66% from mid-2025 through January, excluding a typical year-end decline. The latest decline represents the largest January-March drop in the clearance rate since the outbreak.

Close to 70% indicates a seller’s market.

Luke Bindley, director of Austin Buyers Agents in Sydney, said homebuyers were losing confidence after two interest rate hikes and the war against Iran sent prices soaring across the economy.

“Many auctions end or don’t even make it to auction day,” he said. “At this point I don’t think it’s even worth putting your property up for auction unless it’s truly private.”

Bindley said properties in Sydney’s outer suburbs were still popular but the inner city had become a “buyer’s market”.

Successive interest rate increases have made it harder for buyers to get new loans.

The typical mortgage rate rose to around 6% from around 5.5% at the beginning of the year, Canstar found; That means someone making $107,000 could borrow about $535,000, or $25,000 less than they could in January.

Credit Market data shows the number of first home buyers on the market fell by a quarter from early February to early March following the first rate hike.

First-time hopefuls have pushed back even in more affordable areas such as Brisbane’s western corridor, where competition is stronger, according to Loan Market mortgage broker Justin Hewitt.

“There has been some slowdown in the market in the last two or three months and [I’m] “We are seeing a little bit more investors and developers,” Hewitt said.

Hewitt said around two-thirds of his customers are first home buyers by late 2025, but they’re now at just over a third.

The falling demand has coincided with an increasing number of people trying to sell their homes; 4,163 homes are expected to go to auction across the country in the week of March 23 – the highest figure since December 2021.

Cotality found that rising home prices in 2025 increased sales profits, with sellers’ earnings reaching a record $365,000 in December. More than 95% of those who resold their properties in the December quarter sold at a profit.

House prices are still rising to new record levels in most capital cities, but according to daily Cotality data, they have fallen in Melbourne and remained steady in Sydney; This encouraged homeowners and investors to sell and cash out.

The Reserve Bank has warned that increases in interest rates could encourage more sales as more homeowners will soon have expenses beyond their income.

The fall in inflation and interest rates has shown the share of residents with mortgages spending more than they earn has fallen from around 4.5% in 2023 to around 1.3% today, according to the RBA’s financial stability review last week.

The review predicts revived interest rates and a rebound in unemployment will push the figure above 1.6% by the end of 2026, forcing some to make the “difficult and devastating” decision to sell their homes.

While major banks expect the RBA to raise interest rates once again at its meeting in May, markets predict another increase by November.