Victor Baralos understands the volatility of the Australian property market. In 2012, he found himself in a fierce bidding war, competing against 25 other hopefuls to secure a home in Sydney’s inner west. He eventually won the property for $200,000 over the reserve price, a bold move made during a period when nearly half of the nation’s auctions were failing.
Fast forward to 2026 and the calculation has changed. Baralos recently listed his four-bedroom house in Croydon Park, but rather than waiting for the hammer to fall at auction, he closed the deal privately just one week after listing—three weeks before his scheduled auction date.
The buyers offered less than Baralos believed the home would have fetched in December. Despite the lower price, his agent, Michael Poynting of Harris Tripp, encouraged the sale. For Baralos, the decision was a matter of pragmatism over potential.
“I could have let it run, but I said to myself, a bird in the hand is better than 10 in the bush,” Baralos said. “You cut to the chase, you gain it done, and move on.”
Baralos’ experience is a microcosm of a broader trend. Mounting economic stress affecting Australian homebuyers is fundamentally altering how properties are sold in the nation’s largest cities. As sales rates slide and buyer confidence wavers, homeowners are increasingly abandoning the traditional auction process in favor of early private sales—or withdrawing their listings entirely.
A chilling effect on the ‘Big Two’ markets
The decline in buyer appetite is most evident in Sydney and Melbourne. According to data from Ray White, the average auction in these two capitals saw a one-third drop in the number of bidders during the final week of March compared to the previous year. This slump in activity is translating into slower turnover and softening prices.
The volume of finalized sales has seen a precipitous drop. In the December quarter, both cities recorded nearly 30,000 sales each; by the March quarter, that number had plummeted to fewer than 20,000 per city. Properties are likewise spending more time on the market. Even as homes in both capitals typically sold in 30 days or less during the latter part of 2025, they now average 33 days in Sydney and 35 in Melbourne.
Auction clearance rates—the percentage of properties sold at auction—have hit multi-year lows. In the final week of March, Sydney’s clearance rate fell to 50.4%, the lowest since July 2022, according to Cotality data. Melbourne followed a similar trajectory, with its rate dipping to 54.2% during the same period.
| City | Clearance Rate | Days on Market | Market Trend |
|---|---|---|---|
| Sydney | 50.4% | 33 Days | Declining |
| Melbourne | 54.2% | 35 Days | Declining |
| Perth | N/A | 9 Days | Strong Growth |
The macroeconomic drivers of the slump
The current instability is rooted in a cocktail of inflationary pressures and monetary policy. Rising fuel prices have increased costs across the supply chain, contributing to persistent inflation. This has left the Reserve Bank of Australia (RBA) warning that further mortgage rate hikes may be necessary to stabilize the economy, even at the risk of increasing unemployment or triggering a recession.
This uncertainty has crushed consumer confidence, which has fallen to a record low in surveys conducted by ANZ. For potential buyers, the prospect of higher monthly repayments combined with a fragile job market has made the risk of a large mortgage untenable.
Although, the stress is not felt uniformly across the country. In smaller capitals, sellers remain protected by acute supply shortages and robust price growth. Melinda Jennison, president of the Real Estate Buyers Agents Association of Australia (Rebaa), notes that in cities like Brisbane, Adelaide, and especially Perth, the market remains skewed in favor of the seller. In Perth, for instance, homes typically sold in just nine days in March.
“There’s still more buyers than there are sellers,” Jennison said.
The shift toward private treaty and ‘cold feet’
In the high-priced markets of Sydney and Melbourne, the power dynamic has shifted. Jennison suggests that buyers are now “in the driving seat” because sellers can no longer rely on a crowd of interested parties to drive up the price. This has led to an increase in private treaty sales—direct negotiations between buyer and seller—which have risen in Melbourne from roughly 2,000 to 2,400 per week in March.
For some agents, the lack of “energy” in the market is palpable. David McMahon, Ray White’s head of auctions for Sydney, shared his own experience trying to sell a property in the Sutherland Shire. Despite his professional standing, he saw only seven buyers attend an open home where he had expected 20.
“We wanted $1.6m but $1.6m is clearly not there any more,” McMahon said, noting that owners are now forced to consider price cuts of several thousand dollars just to attract interest. He added that owners are increasingly reluctant to re-auction a property if it fails the first time, as the overall depth of the market has evaporated.
This lack of confidence is leading to a surge in listing withdrawals. In the final week of March, 20% of Sydney homes were withdrawn before their auction date—the highest rate since 2022. Preliminary data from Cotality suggests this withdrawal rate may have since climbed to 30%.
Alice Stolz of property marketplace Domain describes this as a case of “cold feet.” She explains that vendors who lack the nerve to face a potential auction with no bidders are simply removing their homes from the market. While some are forced to sell, many others are choosing to wait for a market rebound.
Disclaimer: This article is provided for informational purposes only and does not constitute financial or investment advice. Readers should consult with a licensed financial advisor before making property investment decisions.
The market now looks toward the next scheduled meeting of the Reserve Bank of Australia, where any decision on interest rates will likely dictate whether the current trend of withdrawals continues or if buyers regain the confidence to return to the auction floor.
Do you think the current market dip is a buying opportunity or a warning sign? Share your thoughts in the comments below.
