National clearance rates fall below 50% for the first time since COVID: what it means for first home buyers

The combined capital city auction clearance rate fell to 47.4 per cent for the week ending June 21, 2026 - the first time the national figure has dropped below 50 per cent since the early days of COVID in April 2020. Preliminary Cotality data shows the result is down from 54 per cent the previous week and well below the 65.3 per cent recorded over the same period last year. For first home buyers who have spent years watching properties sail past reserve with multiple bidders, this represents a genuine and measurable shift in market conditions.

What the clearance rate data shows across each capital city

The weakness is broad-based, not confined to one or two cities. Brisbane recorded a clearance rate of just 33.3 per cent for the week, down from 55.6 per cent over the same week in 2025 - a fall of more than 22 percentage points in twelve months. Adelaide came in at 40 per cent, down from 67.5 per cent a year ago. Sydney, which had been more resilient through the first half of 2026, also fell sharply to join the broader national softening.

A clearance rate below 50 per cent means more properties are failing to sell at auction than are succeeding. When a property passes in, the highest bidder earns the right to negotiate privately with the vendor - often at a price well below what competitive bidding might otherwise have achieved. In a market running at 65 per cent clearance, those negotiations rarely happen. In a market running below 50 per cent, they are happening everywhere.

Why this is a bigger shift than earlier softening

Clearance rates dipped modestly in late 2025 and through the first months of 2026, but the market remained above the 50 per cent threshold - the conventional dividing line between a sellers' market and a buyers' market. The fall below that threshold now reflects the cumulative effect of three separate rate hikes in 2026:

• Borrowing capacity has fallen. Three rate increases since February 2026 have added more than $270 per month to a $600,000 mortgage and reduced the maximum most first home buyers can borrow, pricing some out of price brackets where they had previously been competitive.
• Investor activity is pulling back. The federal government's announced restriction on negative gearing for established properties - taking effect from July 2027 - has reduced investor appetite for established homes, thinning the field of bidders at auctions in the mid-price range.
• Buyer confidence is subdued. With the RBA's next meeting scheduled for August 11 and markets pricing approximately a one-in-two chance of a further rate rise, many potential buyers are waiting for clarity before committing. That hesitation reduces the number of registered bidders at auctions and translates directly into lower clearance rates.
• New listings have increased. More properties coming to market gives buyers more options and reduces the urgency to compete aggressively at any single auction, spreading available demand across a wider pool of stock.

The affordability paradox buyers need to understand

Lower clearance rates and some price softening in Sydney and Melbourne do not automatically make buying cheaper. The Cotality June 2026 Monthly Housing Chart Pack highlights a complication that every first home buyer should factor into their planning: the three 2026 rate hikes have pushed serviceability requirements up significantly, even as headline prices have drifted lower.

Aspiring buyers in Brisbane needed approximately $17,000 more in annual household income in May 2026 than they needed in January to service a typical mortgage on a lower quartile home. Perth buyers faced a similar $16,500 increase over the same period. In cities where prices have not softened - particularly Perth and Adelaide - the combination of higher rates and still-rising values has made affordability meaningfully harder despite the weak auction clearance numbers.

The buyer leverage is real in markets like Brisbane and Melbourne where prices have retreated, but it needs to be matched with genuine borrowing capacity. A property that passes in is only an opportunity if you can secure finance to complete the purchase.

What first home buyers should do in this market

A market running below 50 per cent clearance is one of the more favourable environments first home buyers have seen since 2020. Here is how to position yourself to take advantage of current conditions:

• Attend auctions in your target suburbs without the pressure to bid. Observe how many registered bidders turn up, how quickly the auctioneer reaches the vendor's bid, and whether properties pass in. Two or three visits will give you a clear sense of how much competition you would actually face in that specific pocket of the market.
• Secure formal pre-approval before engaging at any auction or post-pass-in negotiation. A lender or mortgage broker can confirm your current borrowing capacity so you know your ceiling before you walk through the door. Pre-approval also signals to vendors that you are a serious buyer, which matters in private negotiations after a property passes in.
• Factor in the August 11 RBA meeting. If the board hikes again, your borrowing capacity will fall further. If it holds, buyer confidence may recover and competition could increase in the second half of 2026. Stress-testing your budget across both scenarios before committing is sensible preparation rather than guesswork.
• Check your eligibility for government grants and deposit schemes before finalising your budget. Queensland's $30,000 first home owner grant applies to contracts signed on or before June 30, 2026 - there are only days left. Tasmania's stamp duty exemption also expires June 30. The ACT, by contrast, abolishes stamp duty for all first home buyers from July 1, with no price cap and no income test.
• Remember that clearance rates are a lagging indicator of market sentiment. The window of elevated buyer leverage could narrow if the RBA holds in August and confidence returns. Acting with clear financial parameters now is more effective than waiting for conditions to improve further.

Run the numbers

Use these tools to understand how the current auction market and rate environment affect your buying position:

• Borrowing Power Calculator - model your current borrowing capacity at 4.35 per cent and see how a further August hike would change the figure before you set your auction budget
• Interest Rate Shock Tester - stress-test your repayments across multiple rate scenarios so you know your ceiling before bidding and understand your buffer if rates move again in August
• Am I Ready to Buy? - assess your overall readiness to act in the current market, from deposit size and borrowing capacity through to scheme eligibility and timing
• Grant Stacker - check grants, stamp duty concessions, and federal scheme eligibility in your state, including any deadlines that apply before July 1