iscover 
The preliminary auction clearance rate for the combined capitals fell under 50 per cent for the first time since early in the pandemic, in the week ending 21 June.
Cotality’s Property Market Indicator Summary showed that, across the capital cities, 47.4 per cent of properties returned a successful early result, the lowest reading since the final week of April 2020.
Meanwhile, 23.6 per cent of scheduled auctions were withdrawn, with nearly half, 48 per cent, sold prior to going under the hammer.
Total volumes also remained low, with just 1,869 capital city homes going to auction, a 10.8 per cent drop on the previous week and 6.7 per cent fewer than the same week a year ago.
Sydney’s preliminary clearance rate fell to 47.4 per cent from 52.8 per cent, its lowest early result since the week ending 19 April 2020.
Melbourne's preliminary clearance rate also fell, dropping to 50.6 per cent from 57.6 per cent, marking its weakest early result since September 2021.
Market loses momentum
Brokers said the softer auction results reflected a broader cooling in housing market activity, with buyer urgency easing and purchasing decisions taking longer.
Jinal Doshi, senior broker at Rogerson Kenny Finance, told Broker Daily she had seen a noticeable loss of momentum over the past six to eight weeks.
“The drop in auction clearance rates reflects what we’re seeing on the ground - properties are taking longer to sell, there’s more price negotiation, and listing volumes have increased without the same level of buyer competition we saw earlier in the year,” she said.
“I also attend open homes regularly and have noticed significantly lower foot traffic. Discussions with real estate agents suggest the market has clearly softened.”
Doshi added that affordability constraints, rate fatigue and cost-of-living pressures were driving many borrowers to take a more cautious approach.
“While the rate cycle has stabilized somewhat, borrowers are still feeling the cumulative impact of previous increases. Cost-of-living pressures are also playing a major role, with many clients becoming more cautious and conservative in their borrowing decisions.”
Also speaking to Broker Daily, Chris Foster-Ramsay, director of Foster Ramsay Finance said that buyers were becoming “more considered” rather than retreating from the market altogether.
"We're seeing buyers conduct more research, seek second opinions and place a greater emphasis on maintaining cash reserves and flexibility rather than stretching to their maximum borrowing capacity," he said.
"That's creating a more balanced market. Buyers are showing discipline and patience, and in many cases that's leading to better long-term decisions rather than fear of missing out driving the conversation."
First home buyers and investors grow cautious
After surging at the start of the year, first home buyer (FHB) demand has eased according to brokers.
“FHBs remain active but are far more selective,” Doshi said.
“They’re aware they now have greater negotiating power, and I actively guide them to take advantage of that, often holding back unless they see clear value."
Renae Long, founder of FAM Brokers, told Broker Daily that she had seen the high rate environment affecting FHBs home buyers the most.
“Cost of living pressures, affordability challenges, and ongoing interest rate uncertainty are key factors influencing buyer behaviour,” she added.
Similarly, Sinead Grant, director and Finance Broker for Flint Group said that FHB had been hit hardest, despite the federal budget seeking to help them into the market.
“They're trying to enter a market where prices remain elevated and borrowing capacity is still stretched," she added.
Investor demand has also softened.
“Investors appear to be the most impacted, particularly due to tighter serviceability and uncertainty around yields versus holding costs,” said Doshi.
“I’ve recently had two investor clients pause applications mid-process while they reassess their position with their accountants.”
Indeed, Westpac economists have already forecast that new investor activity could fall 34 per cent in the near term, while total housing market turnover is expected to decline by 20 per cent.
Brokers have told Broker Daily how the federal budget’s taxation reforms could reshape the investor market, with a new focus on SMSF, new builds or commercial property.
Structural shifts
Grant said that one structural shift she had noticed was that borrowers were increasingly seeking advice earlier and asking more questions.
“Borrowers are less focused on how much they can borrow and more focused on whether a purchase aligns with their long-term goals. To me, that's a sign of a more considered market rather than the start of a major downturn,” she said.
Another shift brokers are observing is the growing role Gen Z buyers are playing in the market.
Doshi said she had seen a surge in applications for first homes among the demographic.
“I currently have around five live applications in this segment, which highlights increasing awareness among younger buyers about entering the property market earlier and getting onto the property ladder sooner.”
[Related: Budget could reshape investor market, brokers warn]
Want to see more stories from trusted news sources?Make Broker Daily a preferred news source on Google.