Low listings, weak auctions: what's really happening in the property market?

Across many parts of Australia, particularly in Sydney and Melbourne, property sellers are choosing to hold off listing their properties altogether.

While housing supply remains tight and buyers continue searching for quality homes, many vendors are deciding that now may not be the ideal time to sell and therefore worsening housing supply shortages.

This has created an unusual market dynamic. Stock levels remain relatively low, particularly in desirable family suburbs, which creates pockets of scarcity. Yet we are not even close to seeing the market itself booming.

Buyers aren’t flooding open homes, properties aren’t selling within hours, and auction clearance rates are hitting all-time lows.

This should be a recipe to create a booming market with the lack of supply, but we are not seeing this as the case.

So, why are so many sellers choosing to wait? And why are buyers not snapping up properties in a mad rush?

Federal Budget uncertainty is weighing on confidence

The biggest factor influencing seller behaviour is the uncertainty of how the Federal Government’s housing reforms will impact property investment and taxation.

The proposed changes to negative gearing, capital gains tax concessions, and trust structures have sparked widespread debate among investors, property owners, accountants and financial advisers.

There is uncertainty on where interest rates will head in the latter half of 2026 and we know one thing for certain; uncertainty rarely encourages people to make major financial decisions.

Many are choosing to wait on the sidelines until more certain times. We are seeing sellers who might otherwise have listed their property instead choosing to wait for greater clarity.

If there is a possibility market confidence could improve in six or 12 months, many sellers would rather delay their sale than risk accepting a lower price today.

Auction results are sending a message

The reporting of auction results usually provides one of the clearest indicators of where buyer confidence is sitting, and recent auction data has been far from encouraging.

National preliminary auction clearance rates have fallen to around 47 per cent in June 2026, which is the lowest level recorded since the early stages of the pandemic in 2020.

Sydney and Melbourne, Australia’s two largest auction markets, have experienced particularly noticeable declines in clearance rates, with large numbers of properties being withdrawn or passed in.

Auction clearance rates above 70 per cent are generally considered indicative of a strong sellers’ market.

Rates below 55 per cent typically suggest buyers have gained the upper hand.

With the current results sitting well below this benchmark, it clearly indicates that there is a lot of uncertainty.

Don’t underestimate seasonality, scarcity

The colder seasons always bring a quieter period property with the colder weather, school commitments, and mid-year distractions that typically reduce buyer and seller activity.

This seasonal slowdown is amplifying the effects of already cautious market conditions.

Many vendors who may have considered selling have opted to postpone their plans until spring, traditionally Australia’s busiest property selling season.

Interestingly, seller hesitation has created a shortage of available listings in many sought-after suburbs.

Family-friendly suburbs with strong schools, good transport connections, and lifestyle amenities continue to attract buyer interest but many homeowners in these locations are choosing not to sell unless absolutely necessary, meaning that buyers are finding fewer properties available than expected.

This scarcity should not be confused with a booming market.

The reality is that reduced supply is preventing sharper price declines in some areas, rather than driving widespread price growth. To clarify, the current scarcity is supporting the current market values, but it is not generating the type of frenzied competition seen during previous market peaks.

It might seem logical that the limited housing supply would lead to rising prices but the markets are driven by the economics of supply and demand.

Although supply is constrained, demand has weakened compared to what we experienced in 2024 and 2025.

There are several factors contributing to this, mainly the higher borrowing costs that are affecting buyers’ serviceability and affordability, the rising cost of living pressures, and the recent Federal Budget reforms.

The result is that overall buyer confidence has weakened and so buyers are willing to ignore opportunities, negotiate harder, or wait for better opportunities, whether this be better stock to buy, or better financing and borrowing capacity.

With the low auction clearance rates, there is no pressure to act quickly in the current market conditions.

Outdated price expectations

Perhaps the biggest challenge facing today’s market is the gap between what sellers want and what buyers are willing to pay.

The issue with price expectations, is that many vendors are continuing to benchmark their property’s value against sales achieved during late 2025 and early 2026 that are no longer relevant.

Properties that may have attracted fierce competition a year ago are now facing a smaller buyer pool and more cautious purchasers.

The only way to overcome these issues is for sellers to reassess their price expectations and for buyers to gain more confidence in the market and the potential of the properties, so that negotiators are able to come to an agreement.

When spring approaches, buyers may have greater choice as more listings emerge. Sellers will need to recalibrate their price expectations to be more realistic if they want their property to sell.

The right time for investors

The time is ripe for property investors to negotiate on properties that are good quality assets but have been sitting on the market.

Potentially, if you find a desperate seller who has another pending settlement, you may be able to pick up some good deals right now.

Understanding the motivations of the sellers and the flexibility of the contract sale terms, might lead to some attractive deals getting across the line for property investors.

One thing is for certain, once buyer confidence strengthens, we will see property prices rise and investors who were waiting on the sidelines will regret that they didn’t take the opportunity currently presenting itself.