Australia's property market is showing tangible signs of stress as rising interest rates bite into buyer capacity and confidence. The national preliminary auction clearance rate has now held below the 60% mark for a second consecutive week, with auction volumes jumping 176% from the prior Easter-shortened week.
The Easter long weekend's auction results showed further deceleration, with Cotality reporting a preliminary clearance rate of only 55.5% across the combined capital cities, the lowest result since July 2022 and the first time the preliminary clearance rate has been below the 60% mark since December 2022. Melbourne and Sydney, the two markets most sensitive to interest rate movements, are registering the weakest results, with Cotality's daily dwelling values index showing flat or negative price growth across both cities over the past month.
The forward outlook is becoming more uncertain. SQM Research forecasts that if the official cash rate rises above 4.5%, Sydney and Melbourne could record dwelling price declines of between negative 4% and negative 9% this year. With Westpac now forecasting the cash rate could reach 4.85% by August, that scenario is no longer a remote tail risk. For investors and owner-occupiers alike, the combination of tightening credit conditions, weakened sentiment, and potential CGT reform creates a complex and increasingly challenging environment to navigate in the months ahead.
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