Housing market cooling off? High withdrawals and low sales could spell slowdown

Cartoon of people bidding at auction.

Ever been so unpopular you straight up took yourself off the market? Turns out this was the case for a startling number of sellers this week, with nearly one in five Sydney properties withdrawn against a middling success rate of only 62%.

Heat in the housing market has been easing for a while now, especially now home loans have gotten more expensive. But could this slump of seller confidence and buyer activity indicate a deeper slowdown (and great news for first home buyers)?

Let’s unpack what happened this week in Australian property, and the larger market trends heralded by the data.

Not enough people turning up to open houses

Cartoon sellers advertise their home.

Noisy election weekends tend to make for a quieter housing market. Research firm Corelogic reports the number of auctions in Australia’s capitals was down nearly 42% from last week, though still slightly above 2019 election levels.

While clearance rates have been trending down all year, this week saw only 63% of auctioned properties sell – an all-year low. What’s worse, the final sales rate may be even lower. (For context, last year’s sales rate was nearly 76%).

But sales aren’t the only meaningful stats worth considering. What alarmed us this week in particular were the number of homes either sold prior to auction, “passed in”, or ultimately withdrawn from the market.

Total auctionsSold at auctionSold prior to auctionSold after auctionPassed inWithdrawn

For an auction to be successful, housing vendors usually hope for more than a mere sale: they want at least two competing bidders to drive up the final price. In fact, hotly competitive auction lots were a huge force in last year’s property boom.

But these stats indicate that at least 80% of auctioned properties in Australia’s capitals didn’t successfully sell in the actual auction itself. Instead, sales were made before or after the auction, to diminished results, or not at all.

Nearly one in five homes sold prior to auction, which indicates that more and more sellers might not be willing to risk lacklustre competition (or no bids at all) at the main event. Instead, they’re settling for something resembling an off-market purchase, which can typically be at a lower price. 

Normally either a sure deal, itchy feet, or fear of the unknown would cause a seller to bypass the auction process altogether. However, lagging prices overall suggest these deals weren’t too good to pass up for their value.

Meanwhile, an 18% “passed in” rate means bids at those auctions weren’t as high as the vendor would’ve liked, so the top bidder was invited in by the real estate agent for private negotiations. What used to be a battle is now a white-flag truce on the part of the vendor. No wonder prices have dropped by -0.6% in Sydney and -0.4 in Melbourne!

Underwhelming auctions could indicate fewer investors and cashed-up hopefuls, who were the primary culprits of last year’s record-breaking 23.7% price surge. Now, the people who usually push first home-buyers out of the running have seemingly stepped aside.

Cartoon people analyse the housing market.

Why are so few people turning up to auctions? 

Falling demand may be due to an alarming increase in the cost of housing finance, catalysed primarily by rising interest rates, the RBA’s latest decision, and the disheartening cost of living

With consumers and banks alike feeling the burn of runaway inflation, many investors have disappeared from auction lots, significantly reducing the competition and dragging down price growth. Instead of the bidding scrambles of last year, we’re seeing one-man shows. 

Uncertainty surrounding the election hasn’t helped the property market either, with both frontrunners proposing wildly different solutions to Australia’s housing crisis. 

Dwelling prices may have also boomed too far out of reach for most Aussies. Massive oversupply at the pricey end of the spectrum and undersupply at the affordable one cuts demand considerably, since all those who could buy, have, and all those who couldn’t…still can’t. It's a messy situation.

Fewer sales at fewer auctions suggests a housing cooldown, or at the very least a cooling off period. How long it will last is unclear, but its immediate effects have already been felt – and its causes likely won’t go anywhere soon. For buyers making decisions about property in 2022, these will be critical to keep in mind.

Loan details

Rate change

Repayment change if rates go up

If the property market is cooling down, what could this mean for hopeful buyers?

Cartoon people shake hands over a giant contract.

While we speculated on a housing slowdown earlier this year, we’re finally seeing glimpses of the lagging prices buyers have long been craving. Doom and gloom for sellers may yet mean sunshine for buyers!

Since sellers don’t have the bounty of offers they relied on last year, there could be more opportunities for buyers who are usually up against it. For those looking for hope and chances in 2022, now may be your moment. 

But before you rug up for a winter auction, make sure you:

  • Save for a deposit after gauging how much you’ll need.
  • Work out how much you can borrow. You can get an idea of your borrowing power with our handy calculator. This helps you prepare for your serviceability test. (But there’s still hope if the bank won’t lend you as much as you want!)
  • Compare home loans and find the best rate. Luck favours the prepared! Head over to our home loan comparison hub to get started.

Eyeing up the property market? Eye up some home loans below, or have a read on how reforming the rental market could benefit homeowners.

Compare home loans - last updated 29 May 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.25% p.a.
    fixed 3 years
    6.20% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

  • Discount Variable Home Loan

    Owner Occupier, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    5.99% p.a. variable
    6.01% p.a.

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.09% p.a. variable
    6.09% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).


* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.