Australian property market slowdown due to rising interest rates and economic uncertainty
Consensus Summary
Australian property markets are experiencing a significant slowdown driven by rising interest rates, economic uncertainty, and geopolitical tensions. Auction clearance rates have plummeted below 60% in Sydney and Melbourne, signaling a shift from sellerâs to buyerâs advantage, with properties frequently passing in at auction. Consensus across sources confirms that first home buyers are withdrawing from the market, mortgage rates have climbed to around 6%, and sellers are rushing to list homes before further rate hikes. While sub-$1 million properties in Melbourne are performing well, more expensive or renovation-needing homes struggle to attract buyers. Economists warn of continued rate increases, with the RBA and markets anticipating further hikes, exacerbating mortgage stress. Sellers are advised to adjust pricing, while buyers are adopting lowball tactics and waiting for better opportunities, reflecting a cautious market transition.
â Verified by 2+ sources
Key details reported by multiple sources:
- Sydneyâs preliminary auction clearance rate was below 60% last weekend (SMH: mixed data, GUARDIAN: 55%, THEAGE: 59% reported as below 60%), indicating a buyerâs market.
- Melbourneâs auction clearance rate was below 60% last weekend (SMH: below threshold, GUARDIAN: 57% nationwide with no specific Melbourne figure, THEAGE: 59%).
- The national auction clearance rate dropped to just under 57% last week, the lowest this year (GUARDIAN: Cotality data; SMH: lowest so far this year).
- The Reserve Bank of Australia (RBA) warned that mortgage stress could rise above 1.6% by the end of 2026 due to higher interest rates (GUARDIAN: RBAâs financial stability review; SMH: economists predicting rate rises).
- First home buyers are withdrawing from the market, with Loan Market data showing a 25% drop in first-time buyers from early February to early March (GUARDIAN: Justin Hewitt; SMH: no direct mention of 25% but notes reduced first home buyer activity).
- The typical mortgage rate rose to about 6% from 5.5% at the start of 2026, reducing borrowing capacity by approximately $25,000 for someone earning $107,000 (GUARDIAN: Canstar; SMH: no direct borrowing capacity figure but references rate hikes).
- Westpac lifted its forecast for the peak cash rate to 4.85% (SMH: Westpac senior economist Matthew Hassan; GUARDIAN: no direct mention of 4.85% but references RBA rate hikes).
- The number of homes listed for auction in the week of 23 March was the highest since December 2021, with 4,163 auctions scheduled (GUARDIAN: Cotality data; SMH: no exact number but notes increased auction activity).
- Properties in the sub-$1 million bracket are performing well in Melbourne, while more expensive homes are passing in at auction (THEAGE: Wendy Chamberlain; SMH: no direct sub-$1M figure but notes affordability focus).
- Auctioneers report buyers are adopting lowball tactics, starting bids below reserve prices, and waiting for better opportunities (SMH: Damien Cooley, Clarence White; GUARDIAN: Luke Bindley).
Points of Difference
Details reported by only one source:
- Damien Cooley (Cooley Auctions) noted that some properties attracted zero to three bidders, while others drew two to four, and one auction almost achieved a suburb record (SMH only).
- Clarence White (Menck White Auctioneers) said buyers are using âlower starts, even tighter incrementsâ and waiting to buy âanother for a better price in two weeksâ timeâ (SMH only).
- John Bongiorno (Marshall White) warned vendors that âcomparable sales from late last year may no longer be relevantâ due to market shifts (SMH only).
- Gerard Burg (Cotality) stated that new listings have been holding above the five-year average, suggesting sellers are rushing to list before further rate hikes (SMH only).
- Matthew Hassan (Westpac) linked auction clearance rates to âan enormous amount of uncertainty around the Middle East conflictâ and domestic inflation (SMH only).
- Sydneyâs new listings are up 4% year-on-year, while Melbourneâs are up 10% (SMH only).
- Luke Bindley (Austin Buyers Agents) said âa lot of auctions are passing in or not even making it to auction dayâ due to buyer confidence loss (GUARDIAN only).
- Justin Hewitt (Loan Market) noted that first home buyers now account for âa bit over one-thirdâ of customers, down from two-thirds in late 2025 (GUARDIAN only).
- The typical mortgage rate rose to about 6% from 5.5%, reducing borrowing capacity by $25,000 for someone earning $107,000 (GUARDIAN: Canstar; not in SMH).
- Resellersâ gains hit a record $365,000 in December 2025, with over 95% of resold properties sold at a profit (GUARDIAN only).
- The RBAâs financial stability review forecast mortgage stress to rise above 1.6% by the end of 2026 (GUARDIAN only).
- Big banks expect the RBA to hike rates in May, with markets betting on another increase by November (GUARDIAN only).
- Wendy Chamberlain (buyerâs agent) noted that first home buyers can access the Australian Governmentâs 5% Deposit Scheme for Melbourne properties up to $950,000 (THEAGE only).
- Emma Bloom (Morrell and Koren) said âturnkey propertiesâ are performing best due to renovation cost concerns (THEAGE only).
- Ray Whiteâs Luke Banitsiotis suggested some sellers are âholding onto the fact their property may have been worth x three to four months agoâ (THEAGE only).
- Luke Banitsiotis advised buyers to place a bid even at quiet auctions to negotiate exclusively with the seller post-auction (THEAGE only).
- Properties needing renovation or with âlofty price hopesâ are more likely to pass in at auction (THEAGE only).
Contradictions
Conflicting information between sources:
- The Guardian reports Sydneyâs auction clearance rate at 55% last week, while The Age reports Melbourneâs at 59% (below 60%), but SMH does not specify exact figures for either city beyond âbelow 60%â.
- The Guardian states the national clearance rate was âjust under 57%â last week, while SMH describes it as âthe lowest so far this yearâ without specifying the exact number.
- SMH reports Westpacâs peak cash rate forecast at 4.85%, but The Guardian does not mention this exact figure and instead focuses on RBA rate hikes in general.
- The Guardian claims first home buyers dropped by a quarter (25%) from early February to early March, while SMH does not provide this exact percentage but notes reduced activity.
- The Guardian highlights that Melbourneâs prices âslippedâ and Sydneyâs âsat flatâ over the last three months, while SMH does not specify regional price trends beyond general slowdowns.
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