Australia's auction clearance rates slump to three-month low as unsold homes surge

Australia's auction clearance rate has slumped to a three-month low, while new data shows the number of unsold homes has surged by more than 20 per cent in the past year.

Less than half the auctions that occurred across the country last week resulted in a successful sale.

The preliminary clearance rate in the past week fell to 48.2 per cent, its lowest since late June (47.4 per cent) and the second-lowest preliminary reading for the year so far.

In the past week, 1,223 auctions were held in the nation's capital cities.

So there were 12.8 per cent fewer auctions than the previous week. It was also a significant 47.5 per cent drop from a year ago, according to new data from property research firm Cotality.

Sharp fall in number of auctions held

Tim Lawless, Cotality's research director, said the weak result came off the back of long weekends in some states and the Reserve Bank's decision to lift interest rates for a fourth time this year.

It also comes after changes in this year's federal budget that sent shock waves through the property sector, including heavily restricted negative gearing, and in many cases higher capital gains tax for sellers.

Sydney and Melbourne "have been a drag on the national result", Mr Lawless said.

In Sydney, 304 auctions were held in the past week, down 61 per cent to the week before. It was also a 38.5 per cent drop compared to a year ago.

There were 670 auctions held in Melbourne. That was a 136 per cent jump compared to the previous week when the city was having the AFL grand final long weekend.

But in the past 12 months, the number of auctions held in Melbourne has dropped 45.6 per cent, the largest decline of any capital city.

Property taking up to six months to sell

Another real estate analysis firm, SQM Research, also released new data, showing some homes were sitting unsold on the market for as long as six months.

Homes that sat unsold for more than 180 days were clogging the market, with 10.5 per cent more older listings compared to a year ago.

Spring's traditional selling boom has ground to a halt so far this season, with the number of unsold homes across the country totalling 276,000 — a 21.6 per cent annual increase.

"The bulk of the increase is property that has been on the market for one to six months and hasn't sold," SQM research director Louis Christopher said.

"In Sydney, fewer vendors are listing than a year ago, yet total stock is up almost a fifth. That's a demand problem, not a supply surge."

Forced sales on the rise

Brisbane and Adelaide have had the largest increase in the number of properties available for sale, up 43.5 and 39.5 per cent respectively, according to SQM's data.

Melbourne, meanwhile, had 30.3 per cent more homes up for sale than it did a year ago.

Perth's figure was up 21.3 per cent, while Canberra's was up 17.8 per cent.

SQM's figures also showed there were 4,872 distressed sales across Australia in September, which was a 29 per cent jump compared to the same period last year.

It follows the ABC reporting last week that Australian housing values had dropped for a sixth straight month, with many economists warning there will be further price falls ahead.

Mr Lawless said Australian households were "deeply pessimistic" about the cost of living crisis, interest recent hikes and the budget's changes to property taxes creating "less favourable conditions".

"Homes are taking longer to sell, auction clearance rates have held below average and advertised stock levels have risen across many markets," he said.