Property clearance rates have fallen to levels we haven’t seen since the depths of COVID.
Domain and realestate.com.au are fielding plenty of complaints. Headlines are calling it a correction. But the real picture is more nuanced than a single number suggests — and what’s driving it matters more than the headline figure itself.
Three Forces, Hitting at Once
This isn’t one thing. It’s three things landing together.
The cash rate sits at 4.35% — among the highest in the developed world right now. That alone cools buyer appetite. Layer on top of that the uncertainty created by this week’s tax legislation — changes to negative gearing and capital gains that investors are still working through. And underneath both of those sits a simpler truth: property prices doubled, in some markets quadrupled, over the past five to ten years. Some cooling was always coming, regardless of policy.
Untangling how much belongs to each factor isn’t straightforward. But all three are real, and all three are pulling in the same direction right now.
Be Careful Calling It a “Correction”
The word correction gets used loosely. Typically it implies something in the order of a 10% decline — and we are seeing that in pockets, including some blue-chip suburbs that rarely see this kind of softening.
But headline clearance rate figures can be misleading on their own. A meaningful number of properties are being withdrawn before auction rather than passing in publicly. That skews the published figures more negative than the underlying market necessarily is. If you’re watching this space, look past the headline number — check how many listings were pulled, not just how many sold.
A Shift in Who Holds the Power
For the first time in a while, there’s genuine talk of a buyer’s market.
That’s a meaningful shift. The advice we give clients consistently is to avoid being a forced seller, avoid being a price taker. If you’re looking to sell in the near term, this is exactly the kind of market where that discipline matters most — being patient and well-positioned beats being rushed.
The Risk Worth Watching
For long-term property holders, this softening isn’t a major concern. Property is a long-horizon asset, and short-term price movements don’t change the underlying thesis for most owners.
The exposure sits with recent buyers — anyone who’s purchased in the last couple of years at the top of the cycle. Negative equity becomes a real possibility for that group if prices continue to soften. Banks have historically been accommodating in these situations, working with borrowers rather than forcing sales. But that accommodation has always rested on an assumption: that property values recover over time. If that assumption comes under real pressure, bank balance sheets start to feel it too — and that can change how accommodating lenders are willing to be.
The Takeaway
A softening property market isn’t automatically a crisis. For most long-term holders, it’s simply a normal part of the cycle — and one that follows an extraordinary run-up in prices.
But if you’re a recent buyer, an investor reconsidering your position in light of this week’s tax changes, or someone planning a sale in the next twelve months, this is exactly the environment where getting your structure and timing right matters most. Don’t let headline numbers make the decision for you.
To find out how we can help see our Capital Management.