Melbourne recently recorded its strongest preliminary auction clearance rate since February, with 63% of properties clearing on the weekend of 10 August, according to Domain.
That put Melbourne comfortably ahead of Sydney at 49%, Brisbane at 26%, Adelaide at 51% and Canberra at 44%. Domain described the result as indicative of a relatively balanced market between buyers and sellers.
But does a stronger auction market mean Melbourne property prices are about to turn around?
There are some good reasons to be cautious about drawing that conclusion. Melbourne’s recent auction performance appears to be partly a story about value and limited stock, and conditions still vary considerably depending on what and where you're buying.
This article is general information only and does not constitute financial, legal or tax advice. We recommend seeking advice from a qualified accountant and solicitor before making any decisions.
Why is Melbourne outperforming?
Two forces appear to be driving the result, and neither points to a runaway market.
The first is value. Melbourne buyers are responding differently to conditions than their counterparts in other cities because Melbourne’s prices haven’t run up the way Sydney’s have.
Cotality’s Home Value Index showed Melbourne’s median dwelling value at $797,354 as at the end of July 2026, down 3.4% over the quarter – the second-largest fall of any capital behind Sydney. Sydney’s median was considerably higher at $1,244,617, having fallen even further over the same three months, down 4.0%. Even compared to the mid-sized capitals, Melbourne’s median told a similar story of comparative expense: Brisbane’s median was $1,104,094 (down 0.6% over the quarter), Perth’s was $1,029,797 (down 0.3%) and Adelaide’s was $944,909 (up slightly, 0.1%).
Against that backdrop, Melbourne is not only the most affordable of the major capitals but also the one where prices have softened the most, and that combination is drawing buyers who feel they're getting genuine value rather than chasing a rising market. Sydney has experienced a sharp downturn after strong growth, which has left buyers there waiting for prices to fall further before committing.
The second factor is stock. Agents across Melbourne report fewer properties coming to market than usual, with some pointing to the upcoming state election as a reason vendors are holding off. According to Cotality, there was a slowdown in the flow of new listings nationally in recent weeks as potential vendors assess a weak market and choose to wait rather than sell into it. Total home listings sat 1.1% below the five-year average by the end of July.
Lower stock coming through means the properties that do go to auction are often the more appealing ones, and agents are being more selective about what they list.
That combination – solid buyer demand meeting a smaller flow of new listings – is enough to lift clearance rates without reflecting a broad shift in prices.
What does this mean if you’re buying?
A stronger clearance rate doesn’t automatically mean it’s harder to negotiate. It depends heavily on price bracket, property type and location.
Melbourne agents reported that properties under $1 million are moving well, while anything above $1.5 million remains considerably slower. Across Melbourne, the gap between value segments is stark. Cotality data showed that the lowest 25% of the market fell just 1.2% over the quarter to July, while the top 25% dropped 4.6%, more than three times the rate.
So a strong headline clearance rate can mask very different conditions depending on where you’re shopping. A well-presented three-bedroom house in a tightly held suburb might attract a crowd and go well above reserve, while a property at the upper end of the market could still sell with minimal competition, or pass in altogether.
If you’re bidding on a property that ticks the obvious boxes – good location, realistic price guide, tidy presentation – you should be prepared to be one of several serious bidders rather than the only one in the room.
But that doesn’t mean the buyer has lost negotiating power everywhere. This is where doing your research before bidding becomes particularly important. Look at recent comparable sales in the suburb, how long properties are taking to sell, whether similar homes are passing in and how much comparable stock is currently available.
Why finance readiness matters more in a busier market
All the market research in the world won’t help if you're not ready to back it up. That’s where finance comes in.
In a quieter market, there’s often room to negotiate after an auction if it passes in or to make an offer contingent on finance being finalised. In a busier auction room, that flexibility disappears. If you want to compete seriously on a property, you need to be ready to bid confidently knowing what you can afford.
Auctions in Victoria are unconditional sales. There is no cooling-off period once the hammer falls, which means there’s no fallback if your finance isn’t sorted and something goes wrong after you’ve signed the contract. That risk grows in a busier market, when a property draws a large crowd and the price runs past what you expected.
The way to avoid that risk is to have your finance approved and structured before you start bidding. That means knowing your maximum with certainty, understanding your loan structure and having pre-approval in place rather than assuming you’ll sort it out once you’ve won.
Reading the signal correctly
A 63% clearance rate is a positive sign that buyers are willing to compete when they see the right property at the right price. But it doesn’t yet point to a broad market recovery.
For buyers, that makes the market more selective rather than universally more competitive. You could face five other bidders at one auction and find yourself negotiating with the vendor at the next.
Understanding the difference means looking beyond Melbourne’s headline clearance rate and assessing the suburb, property type, price bracket and individual property you're actually trying to buy.
And when you do find the right one, having your finance organised means you’re ready to compete without bidding beyond what you can comfortably afford.
This article is general information only and does not constitute financial, legal or tax advice. We recommend seeking advice from a qualified accountant and solicitor before making any decisions.
Thinking about bidding at auction and want your finance sorted first? Speak to the team at AXTON Finance today on 03 9939 7576, email getabetterrate@axtonfinance.com.au or get in touch.
