Softer Auctions, Higher Rates and the Return of Leverage

By late May, the market had moved from speculation to visible softening, with auction clearance rates showing buyers were no longer chasing everything.

ABC reported that clearance rates had been weaker for months, with the combined capital city preliminary clearance rate sitting below the 60% benchmark. The slowdown was not only about the budget. Interest rate rises, affordability pressure and tax-policy uncertainty were all weighing on sentiment.

Read more from ABC: Rate hikes and tax changes have broken the back of the property market

Westpac also updated its housing forecast, saying the budget tax changes plus recent and expected rate rises could drive a sharp fall in new investor activity, weaker turnover and flat average dwelling price growth across the major capitals for 2026.

Learn more from Westpac IQ: Housing forecast update — 26 May 2026

For buyers, this is the first real shift in tone. Vendors who were pricing for last year’s urgency may now have to meet this year’s borrowing reality. The opportunity is not to be reckless. It is to use softer conditions to buy better: better street, better bones, better land, better margin for renovation risk.

What this means for buyers:
This is when discipline matters. A cooler auction room only helps if you have a clear ceiling and are willing to walk away.