Jera Conde

What’s driving the drop in auction clearance rates?

· ·

After years of fierce competition, fast-rising prices, and crowded auction weekends, the market is beginning to shift. More properties are hitting the market, homes are taking longer to sell, and buyers are becoming increasingly selective about what they’re willing to pay.

One of the clearest signs of this change can be seen in auction clearance rates. Nationwide, fewer properties are selling under the hammer, with clearance rates recently dipping below 50%. In Sydney and Melbourne, auction success rates have dropped to their lowest levels in years.

While this may sound like bad news for sellers, it could create real opportunities for buyers. A softer market can mean less competition, more room to negotiate, and a greater chance of finding the right property without feeling rushed.

So, what’s driving the decline in auction clearance rates, and what could it mean if you’re looking to buy?

Federal Budget tax changes

In the recent Federal Budget, the Government announced reforms to negative gearing and capital gains tax (CGT). These measures are now law.

Under the changes, which take effect from 1 July 2027, negative gearing for residential property investments will generally be limited to new builds. The 50% CGT discount for individuals, trusts, and partnerships will also go, replaced with cost base indexation and a 30% minimum tax rate on capital gains.

Existing investments held at 7:30pm AEST on 12 May 2026 will generally remain exempt from the negative gearing changes. CGT reforms will only apply to gains accruing after 1 July 2027.

These changes have cooled investor demand. Many buyers have put their purchasing plans on hold, which has directly impacted auction activity.

Cautious buyers and differing expectations

Buyer demand has softened as market conditions shift. Many purchasers are taking a more measured approach, spending longer evaluating their options before committing. At the same time, some sellers are still adjusting to the current environment. That disconnect is creating a wider gap between what buyers are willing to pay and what sellers expect to receive.

This gap is influencing auction results. With buyers more cautious and clearance rates falling, some properties are not reaching their reserve price. They pass in on auction day and move to private negotiations instead.

Interest rate hikes

Since the start of this year, the cash rate has risen three times. Lenders have passed those increases on, reducing how much buyers can borrow.

Higher rates tighten buyer budgets and weigh on consumer confidence. With fewer eager buyers competing for each property, vendors are finding it harder to reach their reserve price, and more properties are passing in as a result.

How do falling auction clearance rates affect buyers?

A cooling market tends to work in buyers’ favour. When fewer properties sell under the hammer, competition eases, emotional bidding wars become less common, and there is more room to negotiate on price and terms.

Rather than feeling rushed into decisions, buyers now have more time to do their research, get finance approval, and negotiate directly with vendors. In some cases, sellers are also more open to offers before or after auction day.

For buyers who have been watching from the sidelines, this shift may be worth acting on. Every local market is different, but changing conditions can open doors that were firmly closed when competition was at its peak.

Now could be a good time to speak with your broker. Whether you are actively

How to finance an investment property renovation in Australia

· ·

Renovating an investment property can help attract quality tenants, improve rental returns, and potentially add value to your property. But before choosing paint colours or collecting quotes, it’s worth understanding how you’ll fund the project.

Many investors focus on the renovation itself and overlook the impact their funding choice can have on cash flow, borrowing capacity, and long-term costs. Several ways to finance a renovation exist, from accessing equity to topping up an existing home loan. Here’s what you should know before getting started.

Personal loan

Say you want to perform a few cosmetic enhancements. Nothing too major, just a paint job, maybe some new window dressings and/or flooring.

For a small project, a personal loan might be worth considering. Unsecured personal loans don’t use your property as security. Loan amounts and repayment terms are generally set at the time the loan is established.

However, interest rates are often higher than those on home loans, and loan terms are generally shorter. Repaying the loan within one to seven years could mean higher monthly bills.

Refinancing

If your property’s value has increased or you’ve paid down your mortgage somewhat, you may be able to refinance and use the equity to fund your renovation. Equity is the difference between the current market value of your property and what you owe on your mortgage.

This option offers lower interest rates than personal loans. If you’re undertaking a major renovation, refinancing could be worth exploring. Keep in mind, though, that you’ll be adding more debt to your mortgage.

Top-up loan

Another option is to top up your loan to fund your renovation. A top-up loan extends your existing mortgage, allowing you to borrow extra money without opening a whole new loan. Lenders usually add the new funds to your loan balance.

Like refinancing, this gives you access to lower interest rates than a personal loan or credit card. You will likely avoid setup fees that come with getting a new loan, and the approval process generally differs from a complete refinance.

Lenders will usually only let you borrow up to 80% of your property’s value. Exceeding that limit may trigger lenders’ mortgage insurance. Also, spreading the renovation cost over the life of the loan could mean paying more in interest over time.

Construction loan

For larger projects like structural changes to your property, a construction loan might be worth considering. With this type of finance, the lender releases money in stages as your builder reaches milestones.

Depending on the loan structure, you may only pay interest on funds already drawn. Many lenders offer interest-only payments, which could help you manage cash flow during the renovation. Interest rates can be slightly higher, and extra paperwork like building plans and contracts may be required.

Line of credit

A line of credit lets you access equity in your property and draw funds as needed, up to an approved limit. Because you access money when required rather than all at once, some investors use it to help fund renovation projects.

Interest is generally charged only on the amount you’ve drawn, not the full credit limit. However, the facility is secured against your property, so borrowing responsibly is essential. If you can’t meet your loan obligations, your property could be at risk.

Use existing funds

If you have savings or you’ve been putting extra money into an offset account or redraw facility, you might decide to use those funds for your renovation.

Just remember it’s always a good idea to keep a little money aside for cost overruns.

Ready to chat about your finance?

Renovating can be exciting, but understanding your finance options before committing to a project is important.

Reach out if you’d like to discuss your circumstances and explore the finance options that might be available to you.

Australian property market outlook for home buyers and investors

· ·

Australia’s property market is entering a new phase, and many buyers may be looking to better understand the opportunities and challenges that come with changing market conditions.

With buyers increasingly taking their time to purchase and becoming more selective, properties are no longer being snapped up at lightning speed in many markets. Buyers are negotiating harder and walking away if the asking price is not in line with current market expectations.

Recent tax reforms in the Federal Budget have also caused many investors to reassess their purchasing plans and strategies. Sellers are having to adjust their price expectations and adapt to the changing conditions, too.

If you’re looking to buy a home or investment property, talk to us about your finance options. We’ll explain your borrowing power and organise pre-approval.

Interest rate news

With economists and banks not aligned on where the market is heading, the Reserve Bank of Australia (RBA) has decided to leave the cash rate on hold at 4.35% at its June meeting. This follows three consecutive rate hikes so far this year.

While headline inflation has eased, underlying inflation remains elevated.

Annual inflation dropped to 4% in the 12 months to May, largely driven by a decline in fuel prices, which were nearly 12% lower in May.

In contrast, underlying inflation remained more persistent, with the RBA’s preferred trimmed mean measure increasing to 3.6%, up from 3.4% in April.

Treasurer Jim Chalmers welcomed the lower headline inflation rate, but said his government was not “complacent” about the risks.

“We know that there are still inflationary pressures in our economy. But these numbers today are much better than the market expected, much better than forecast, and that’s obviously a very good thing,” the treasurer said.

The RBA said the three rate hikes appeared to be having “broadly the expected effect”, as international economic pressures ease.

“It would take some time to assess the ultimate impact on the economy of the tightening in monetary policy since February but, at this stage, it appeared to be having broadly the expected effect,” the last RBA Board meeting minutes said.

“Housing demand had eased, which also reflected the broader economic environment and recently proposed tax changes.”

The next cash rate decision will be on August 11. Economists and major lenders are divided on the likely path for the upcoming interest rates, as global and domestic factors continue to shape an increasingly unpredictable economic environment.

Home value movements

The latest housing market figures show the downturn is deepening. National dwelling values dropped 0.4% in June according to Cotality, marking the largest month-on-month fall since December 2022.

Sydney’s prices fell 1.2%, Melbourne’s dropped 1%, and Canberra’s were down 0.6%. Adelaide’s prices remained flat, while Brisbane saw modest gains. Hobart and Perth’s values increased 0.6% and 0.7% respectively.

The June quarter marked a significant shift in Australia’s housing dynamic. Capital city home values fell by 1.3% over the quarter, with Sydney leading the pace of decline at -3.2%. Melbourne values were down 2.6%, and ACT values dropped 1.3%.

“Weaker conditions through the second quarter of the year are attributable to an array of downside factors,” said Cotality research director Tim Lawless.

“Even before interest rates rose by seventy-five basis points, we were seeing affordability hurdles weighing on buyer demand.

“Higher cost-of-living pressures, deeply pessimistic sentiment and a further dampening of demand via property taxation changes announced in the Federal Budget are all contributing to weaker housing conditions.”

The cooling market is further evident in falling auction clearance rates, home sales estimates and listing volumes.

“Such low clearance rates indicate a mismatch between buyer and seller pricing expectations. Buyers now have more stock to choose from and less urgency in their decision-making,” Mr Lawless said.

“Higher listings aren’t due to a pick-up in the flow of new listings; it’s a symptom of less demand in the market, which has led to an accumulation of advertised stock.”

Meanwhile, regional markets continue to outperform their capital city counterparts, increasing 1.1% over the quarter, and 0.3% in June.

Home value index

StateAuctionsClearance RatePrivate SaleMonthly Home Values Change
VIC78347%1286▼ -1.0%
NSW87539%1540▼ -1.2%
ACT6043%101▼ -0.6%
QLD22428%899▲ 0.3%
WA1921%514▲ 0.7%
NT757%17▲ 1.4%
TAS1100%148▲ 0.6%
SA13550%2760%

Ready to buy?

Home loan pre-approval typically remains valid for around 90 days, so if you’re considering a property purchase in the coming months, it could be worth discussing your options sooner rather than later. Your broker can help you understand your borrowing capacity, explain the pre-approval process and discuss the factors that may be relevant to your circumstances.

Additional sources

5 tips for first-home buyers to kick off the new financial year

· ·

With property prices easing in some markets and recent federal budget housing tax reforms reducing investor competition, conditions may be becoming more favourable for first-home buyers. There could be more choice, less pressure, and more room to negotiate than we’ve seen in recent years.

Buying your first home can feel like a big leap. Prices, rates, and lending rules are constantly changing. But the start of a new financial year is a great opportunity to reset, get organised, and understand what support is available to help you take the next step.

Here are five tips if you’re looking to buy your first home this financial year.

1) Review your finances

Before you browse listings or attend open homes, get your finances in shape. Lenders don’t just look at your income. They examine your spending habits too, going through bank statements to build a picture of how you manage money day-to-day.

Go through your statements and identify what subscriptions, memberships, or recurring expenses you could cut or reduce. Even modest changes sustained over a few months can strengthen your application and show lenders you’re financially disciplined.

2) Create a budget and supercharge savings

If you don’t already have one, a budget is a useful tool for understanding your finances. Map out your after-tax income alongside your expenses. These might fall into essentials like rent, groceries, utilities, and insurance, and non-essentials such as eating out, entertainment, and hobbies.

From there, you can see how much you could potentially save each month. A well-known framework is the 50/30/20 rule: 50% toward essentials, 30% toward lifestyle, and 20% toward savings. Many people find that keeping separate bank accounts for each “bucket” works well.

3) Do a credit check

Check your credit report before you apply for a home loan. Lenders review your credit history as part of their assessment process.

Under the Privacy Act 1988, you’re entitled to a free copy of your credit report every three months from each of Australia’s three credit reporting bureaus: Equifax, Experian, and illion.

Your credit report generally includes:

  • Your borrowing history over the past five years
  • Any credit applications you’ve made
  • Your repayment history

Each bureau assigns a credit score on a different scale:

BureauScore range
Equifax0 to 1,200
Experian0 to 1,000
illion0 to 1,000

Each bureau uses its own scoring system, so your score may vary between them. Different lenders may also use different bureaus.

If you spot errors or anything that doesn’t look right, contact the relevant credit reporting bureau directly to have it investigated and corrected.

4) Understand the government support

Familiarise yourself with the government support available for first-home buyers at a federal and state level. These schemes vary depending on where you’re buying and your personal circumstances.

The Australian Government 5% Deposit Scheme lets first-home buyers purchase a home with a minimum 5% deposit and government backing. There are no income caps, no limits on places, no waitlists, and you won’t pay Lenders’ Mortgage Insurance (LMI).

The Help to Buy Scheme is a shared equity initiative where the government contributes up to 40% for new builds and 30% for existing homes. Buyers can purchase with a deposit as low as 2% without paying LMI, and 10,000 places are available each year.

The First Home Super Saver Scheme allows you to make voluntary contributions of up to $50,000 into your superannuation to save for a deposit, while taking advantage of concessional tax rates.

Depending on your situation and location, you may also be eligible for the First Home Owner Grant or stamp duty exemptions and concessions. Chat to us and we’ll explain what’s available.

5) Get your finance sorted early

Meet with a mortgage broker before you start house hunting. Understanding your borrowing power upfront saves countless hours looking at properties outside your budget.

We’ll walk you through your borrowing capacity and any upfront and ongoing costs to consider, such as stamp duty, legal fees, and building and pest inspections.

We’ll also help you apply for pre-approval with your preferred lender, so you’re ready to move when you find the right home.

Buying your first home is exciting, and there are plenty of good reasons to jump in now. Let’s make your home purchasing dream a reality this financial year. Get in touch today.