‘Confidence has been lost’: Melbourne sellers ditch auctions

Melbourne’s residential property market is experiencing a significant downturn in auction activity, with more than 1,000 sellers withdrawing their listings since the federal budget was announced in May. New data indicates that the withdrawal rate has nearly doubled compared to the previous year, reaching 16.3% as investor confidence wanes following proposed changes to property tax benefits. This shift marks a critical period for the Victorian real estate sector, as industry experts warn that government policy changes are deterring both buyers and sellers from transacting.

According to new PropTrack data, Melbourne home sellers are abandoning scheduled auctions at an alarming rate, with 1,085 auctions withdrawn out of 6,643 scheduled in the seven weeks following the federal budget. This 16.3% withdrawal rate is nearly double the 8.3% recorded during the same period in 2023, even though that prior period followed 12 consecutive interest rate hikes. Current market activity continues to struggle, with only 546 sellers expected to test the market this week—a 25% decrease from the previous year—while clearance rates have hovered around a weak 48%.

Industry leaders attribute this decline largely to the Albanese government’s May budget, which introduced plans to limit negative gearing to new homes and transition capital gains tax reductions from a flat 50% to an indexed amount. Real Estate Institute of Victoria (REIV) chief executive Toby Balazs described the rising withdrawal rate as a "barometer of confidence," suggesting that the combination of federal and state policy frameworks has left participants uncomfortable with transacting. Ray White chief economist Luke Banitsiotis echoed these sentiments, noting that government interference has significantly sapped confidence from a market that previously remained resilient even during pandemic lockdowns.

While PropTrack economist Luc Redman noted that weakening confidence from high interest rates may also be a factor, he emphasized that the sharp increase in withdrawals since the budget is undeniable. The data shows that a year ago, only 762 sellers abandoned auctions out of 7,248 scheduled, highlighting the severity of the current pullback. Experts suggest that without new incentives or more favorable policy frameworks, the Melbourne auction market—once the nation’s heartland for property sales—may continue to see a lack of balance as sellers choose to walk away rather than face a lack of buyer competition.