In Victoria and New South Wales, roughly one third of homes are sold at auction. Australia is one of very few countries in the world to regularly make use of auctions to sell homes – let alone “open outcry” auctions, where bidders compete with each other out loud in real time.

Auctions are known for this transparency, and there is a perception among many sellers they may get a higher price. But what about their risks – in particular, what happens if an auction fails?

Around the country, auction clearance rates have plunged to their lowest levels since the pandemic, continuing a downward trend that began as interest rates were pushed higher, even before major tax changes were announced in this year’s federal budget.

For buyers and sellers alike, what can research tell us about the upsides and risks of going to auction? And what can a failed auction mean for a property’s final selling price? Our recent research, based on 13 years of data from New South Wales and Victoria, showed just how much of a discount you might expect to see.

Australia’s love affair with auctions

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