Would-be home buyers hoping to snag a bargain could face a shortage of options during the usually busy spring sales season as owners try to ride out a price slump.
Auction clearance rates have rebounded from recent multi-year lows, rising to a preliminary figure of just over 55 per cent in the past week, according to Cotality data released on Sunday.
The share of successful sales reached an 11-week high, although it remained well below the decade average of 68 per cent.
Low auction clearance rates generally point to falling property prices and a weak sales market.
Cotality research director Tim Lawless said the recent bump in clearance rates was the result of fewer auctions being withdrawn, a trend that peaked in June.
A high number of withdrawals could likely be attributed to low numbers of registered bidders ahead of auctions as home owners worried about their ability to achieve their desired prices in a falling market.
National property prices fell 0.7 per cent in July, the largest drop in a single month since December 2022, based on Cotality's figures.
Mr Lawless said current clearance rates pointed to continued downward pressure on home values.
"I suspect we will see a relatively subdued spring listing season as prospective vendors wait out the downturn," he told AAP.
Sales have been particularly weak in Sydney, the nation's most expensive property market, which has also experienced the largest price declines in recent months.
The drop in prices follows a series of interest rate rises and growing cost-of-living pressures on households, as well as controversial changes to property investor tax breaks in the May budget.
Shadow treasurer Tim Wilson said first home buyers were not reaping the benefits of falling house prices as they were mostly restricted to more expensive properties.
"What we're seeing is adjustments around house prices across the country, but it's not at the bottom end," he told News24.
"They're going up, but at the higher ends, they're coming down. That isn't improving the capacity for young Australians to be able to go on and own their home."
NSW Premier Chris Minns recently told a housing conference his federal Labor counterparts' changes to negative gearing and capital gains taxes were “obviously having an impact on affordability" in the market.
“It’s a bad time if you’re selling and it’s a good time if you’re buying," he said.
But federal minister Jenny McAllister on Sunday refused to be drawn on whether she thought the budget shift had contributed to the property price downturn.
She said "a range of factors" were weighing on the housing market, including interest rates.
"Our modelling indicates that the tax changes that we've introduced will see house prices continue to grow in the medium term, albeit somewhat more slowly than would otherwise have occurred," Senator McAllister said.
