The Australian property market has served up a genuinely strange combination this spring: prices are falling at their fastest monthly pace in years, and yet buyers are struggling to find homes to purchase. Falling prices usually come with plenty of choice, so how can there be a shortage? Understanding this unusual dynamic is the key to navigating the market right now. Here’s the plain-language guide.
What the Data Shows
The fall is real and notable. National property prices dropped 0.7 per cent in July, the largest single-month decline since December 2022, according to Cotality’s figures. Sydney and Melbourne have led the falls, with even the previously resilient Brisbane, Adelaide and Perth now showing early signs of their own corrections.
At the same time, auction clearance rates have actually rebounded from their recent multi-year lows.
“Auction clearance rates have rebounded from recent multi-year lows,” Cotality data shows, even as prices keep falling.
That combination, falling prices with recovering clearance rates, is unusual, and the explanation reveals what’s really going on beneath the surface.
Why There’s a Shortage Despite Falling Prices
The answer lies in why clearance rates rebounded. According to Cotality’s research director Tim Lawless, the recent bump in clearance rates was the result of fewer auctions being withdrawn, a trend that peaked in June.
Here’s the mechanism: through the worst of the recent slump, many homeowners worried they couldn’t achieve their desired prices in a falling market, so they either withdrew their properties or didn’t list at all. That created a shortage of homes for sale even as prices softened. The clearance-rate rebound partly reflects that fewer sellers are pulling out now, but the underlying hesitancy to list has left buyers with less choice than a falling market would normally offer.
In short: sellers went on strike alongside buyers. Nervous vendors holding back created the spring sale shortage, and that’s why house-hunters face slim pickings despite the downturn.
What It Means If You’re Buying
This is a more complicated buyer’s market than the falling prices alone suggest. On one hand, prices are soft and you have negotiating power. On the other, the shortage of listings means less to choose from, so the ideal property may be harder to find. The practical approach: be patient but ready. When a home that suits you does come up, you’re negotiating in a soft market, so use that leverage, but don’t expect the abundance of choice that usually accompanies falling prices. Have your finance ready so you can move when the right, scarce property appears.
What It Means If You’re Selling
Counterintuitively, the listings shortage is an opportunity for confident sellers. With fewer homes on the market, a well-presented, realistically priced property faces less competition for buyer attention than it would in a flooded market. If you’ve been hesitating to list out of fear, the thin supply means genuine buyers are competing for limited stock, and the rebounding clearance rates suggest those who go to market are increasingly getting results. Realistic pricing still matters, but the shortage works in your favour.
The Spring Outlook
The big question is whether spring breaks the logjam. Traditionally, spring brings more listings, and if nervous sellers regain enough confidence to list, the shortage could ease, giving buyers more choice but adding competition among sellers. If they stay cautious, the unusual shortage-amid-falls dynamic could persist. Watch the listings numbers as much as the price and clearance data, because supply is the variable that will define this spring. This is general information, not financial advice.
The Bottom Line
Falling prices with a shortage of homes to buy is this spring’s paradox, and it comes down to nervous sellers holding back, creating scarcity even as values soften. For buyers it means real negotiating power but limited choice, be patient, prepared and ready to move. For sellers it means less competition and a genuine opportunity. Watch the listings numbers, because whether spring’s supply arrives will determine how the rest of the year plays out.
Epik Wire covers the property market in plain language for buyers, sellers and owners. Subscribe to our newsletter to stay informed.
