Australia’s clearance rates among its capital cities currently the lowest since Covid-19 began in April 2020

Australia’s capital cities are selling under half of all homes up for auction, according to startling new data.

Property research firm Cotality has found the preliminary clearance rate for every capital city combined fell to 47.4 per cent over the past week.

This would be the lowest clearance rate nationally since the spread of Covid-19 in April 2020.

Cotality research suggested clearance rates for the week could fall even lower as more results came in, and could drift to lows closer to 40 per cent.

Real estate comparison service bRight Agent suggested the results were thanks to shattered buyer confidence in today’s changing market.

Co-founder Aaron Scott said changes announced at the federal budget had combined with the usually slow months of winter to make an unappealing market for buyers.

“Buyers are terrified of overpaying into a shifting regulatory landscape, and bidding has grown incredibly thin,” he said.

“In a sub-50 per cent clearance market, properties are staying on the market longer, and passing a property in at auction is a stressful, costly exercise for everyone involved.”

The latest preliminary results from REA Group placed all but two of Australia’s states and territories beneath a 50 per cent clearance rate.

Western Australia ranked the lowest on record, with only 11 per cent of homes sold at auction.

Queensland’s clearance rate currently sits at 34 per cent, with NSW at 39 per cent, ACT at 42 per cent and Victoria at 48 per cent.

South Australia’s results skewed higher at a clearance rate of 57 per cent, with the Northern Territory faring the best at 60 per cent.

The poor results across the board came after the announcement of the new federal budget, which proposed changes to both negative gearing and the Capital Gains Tax.

These changes included restricting negative gearing to newly-built homes, and a minimum 30 per cent tax on an investment property’s future profits.

These changes are set to take place in 2027 on July 1, with existing investment properties to be grandfathered in under the old rules.

However, Mr Scott said the effect was already noticeable.

“While seasonal factors always play a part in June, the real driver here is a severe crisis of confidence,” he said. “The persistent uncertainty surrounding the federal government’s planned changes to negative gearing and the Capital Gains Tax has paralysed the market.”

Originally published as Australia’s capital cities hit lowest clearance rate since Covid-19 pandemic