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Australia’s auction market posted solid results last week, but the underlying challenges of housing supply and affordability continue to cast a shadow over the sector.
According to CoreLogic’s data for the week ending Oct. 20, the preliminary clearance rate across combined capital cities rose to 67.4% from 66.6% the previous week.
Sydney led the way with 978 auctions and a clearance rate of 70.5%--its highest in five weeks—while Melbourne followed with 1,069 auctions and a clearance rate of 69.2%. However, Brisbane struggled, with only 47.6% of its 227 auctions clearing, marking its weakest result since April 2023.
Across the smaller capitals, results were mixed. Adelaide performed well, with 72.0% of 145 auctions clearing, while Canberra saw a more modest 55.6% clearance rate from 71 auctions. Perth and Tasmania hosted 19 and one auction, respectively, with results still being finalized.
Eliza Owen (pictured), head of research at CoreLogic Australia, explained that while auction activity is improving, broader issues in the housing market remain unresolved.
“The contradiction at the heart of our housing challenge right now is that more supply is needed to help housing values come down, but the residential construction sector is still struggling to deliver housing with a reasonable profit margin,” Owen said, adding that rising costs – such as those for land, materials, and financing – have made it increasingly difficult for developers to bring new housing to market, limiting supply even as demand remains high.
“For private sector developers and builders, arguably home values need to rise further to support some repair in profit margins, or costs associated with delivering new housing supply need to fall,” she said. “The cost of buying and holding land, developing it, putting up buildings and financing projects have all increased in recent years.”
This tension between demand and supply is a key reason why auction performance alone doesn’t tell the full story. More than 3,000 homes are expected to go to auction this week, but even if clearance rates remain strong, the broader issue of affordability lingers.
Governments are trying to address this with policies aimed at boosting supply. For example, Owen said that the federal government has proposed funding infrastructure like water and sewage to reduce developers' costs. The Victorian government has also introduced stamp duty concessions for off-the-plan townhouse and unit purchases to encourage more buyers.
“With housing at the centre of upcoming elections, no doubt more announcements about enabling supply are on the way. But all levels of government need to be careful about getting that supply right if it is going to have take up from buyers,” Owen said.
As the housing market evolves, both auction trends and long-term supply issues will be key indicators of where the market is headed. While clearance rates offer a snapshot of the market’s short-term performance, the ability to address supply bottlenecks will determine its future direction.
