Australia's property market has stalled as the Reserve Bank's campaign to control inflation takes hold. National auction clearance rates fell to 62.7% over the past week, marking the lowest preliminary result since mid-December last year. The decline follows the RBA's decision on 17 March to raise the official cash rate by 0.25% to 4.10%, the second consecutive increase this year.
The numbers reveal a market struggling under rising borrowing costs. A typical $600,000 mortgage now carries monthly repayments of $90 to $100 higher than before the rate increases, with variable interest rates pushing above 6% for many borrowers. Clearance rates across major cities tell the story: Sydney houses achieved 61.3%, Melbourne 60.3%, with unit markets performing slightly better at 73.9% in Sydney and 65.2% in Melbourne.
What the declining clearance rates mask is deeper affordability stress. Sydney's median house price has reached $1.75 to $1.92 million, now commanding 13.8 times the median household income. Brisbane sits at $1.19 million while Melbourne hovers near $1.17 million. For first-home buyers, the mathematics have become brutal. Depending on location, it now takes 12 to 35 years to save a deposit without parental assistance.
The rental market offers no escape. National vacancy rates collapsed to 1.1% in February, down from 1.3% the previous year, creating a landlord's market where tenants now dedicate a record 33.4% of pre-tax income to housing. Darwin's vacancy rate of just 0.3% exemplifies the crisis in tight markets.
Forecasters expect further pressure. While the RBA has signalled data dependency, economists are pricing in potential further rate increases toward 4.35% if inflation proves sticky. The spring season, traditionally Australia's strongest property market quarter, may this year prove to be autumn instead.