For the past six Monday mornings since the federal budget, there has been breathless reporting on how auction clearance rates have fallen over the previous weekend.

Rather than a sign that the world is coming to an end, as some politicians and media pundits would have us believe, it is actually a sign that housing is becoming more affordable.

Auction clearance rates record the proportion of auctions that were successful; in other words, auctions where the seller, and buyer could agree on a price.

A drop in auction clearance rates means that more buyers are unwilling to pay the amount that sellers insist on. Buyers are saying the price is too high, and maybe they’re right. Prices have increased five-fold in the past 25 years and 50 per cent since 2020.

It’s not surprising that this is happening now. The changes in the budget to negative gearing and capital gains tax, that passed the parliament last week, have reduced the tax incentives for investors.

Investors are no longer showing up to auctions........

© The New Daily