NSW auction clearance rates fell to 31.1 per cent in mid-May, the weakest result since the early days of the Covid pandemic in 2020, as buyers and investors pulled back from Sydney auctions amid fears that budget tax reforms could push down home prices.
SQM Research said last week's NSW auction clearance rate was 31.1 per cent, with 881 auctions scheduled. Of those, 149 properties were sold prior to auction, 144 auctions were rescheduled and 399 homes were readvertised as private treaty sales. The result followed about 37 per cent of auctions being successful in the first week of May, a sharp drop from last year when more than 65 per cent of auctions produced a sale over most weeks.
The slide is feeding into an australian property market downturn that experts said was already under way before the Budget. They said the market had been hit by the Iran War and three successive interest rate hikes, and that the tax changes were now speeding up the fall in demand. Agents said the sharpest pullback was coming from investors, after changes to capital gains tax and restrictions on negative gearing announced in the Budget.
Auctioneer Michael Garofolo said house hunters were frozen by the sense that prices could keep climbing even if they waited. “House hunters aren’t affected by the (tax) changes but they’re scared that whatever price they pay today will be higher than in a few months time,” he said. “It’s hard to make a big life decision like buying a home when there’s this level of uncertainty.”
Louis Christopher said the Budget reforms had accelerated a decline that was already in motion. “One hundred per cent the market’s been impacted by the property taxation changes,” he said. “It would predominantly be investors who have stepped back on the sidelines.”
The director of auction house Cooley said uncertainty over the changes was encouraging some would-be purchasers to delay their plans. That retreat matters beyond the sales boards. Fewer investors buying now could mean less new rental supply later, a shift that could eventually put more pressure on rents if the pullback continues.
For now, the clearest signal is the one from the auction rooms: a market that was already soft is softening faster, and buyers are reacting not just to rates and war headlines, but to the fear that waiting may cost them more than moving now.
