Home owners are cutting asking prices up to 60 per cent more often than in 2025, as soaring fuel costs and rising interest rates dampen buyer interest in Sydney and Melbourne.
Guides for properties on the market are being lowered by owners in increasing numbers, with 2574 house listings in Melbourne having their prices lowered in March and 2078 in February, according to data from buyer-oriented real estate platform Homer.
This represented a 33 per cent increase on October and November’s total in Melbourne, the most recent comparable two-month period when excluding the quieter new year period.
In Sydney, meanwhile, price guides on 597 house listings were dropped in March and 397 in February, an increase of 59 per cent compared with the October and November total in the city.
The trend comes as median house prices slide across the two cities, with values falling by 0.6 per cent in Sydney and 0.9 per cent in Melbourne since the start of the year, according to data from Cotality. Prices fell 0.3 per cent in Sydney and 0.6 per cent in Melbourne in March alone.
Clearance rates at auctions have also dived in recent weeks. In the week ending March 28, clearance rates were 54 per cent in Sydney, compared with 65 per cent in the same week in 2025, while in Melbourne, the rate was 56 per cent, down from 63 per cent in the same week the year before, according to data from Domain.
There was also a sharp jump in the number of properties withdrawn ahead of auction in the week to March 28. In Sydney, 340 were withdrawn while 301 were passed in at auction – flipping an order that sees withdrawals as the lower figure in normal times. In the same week in 2025, 170 were withdrawn and 220 were passed in.
The trends also come amid a rise in the number of homes listed for auction. Last month Cotality said the number of weekly capital city auctions had hit its highest level in four years in late March.
While the percentage increase in price guide reductions was significantly more pronounced in Sydney, the total number of price guide cuts was larger in Melbourne due to differing laws.
In Victoria, every property listing must disclose a price guide, but in NSW, there is no such requirement for a price guide to be made public.
This has led to a culture split between the two cities, with Sydney agents seeing price guides less as a publicly visible figure and comparable tool and more of a conversation with prospective buyers, said Henry Pedersen, CEO of Homer.
“In Sydney, agents can hide behind the opaqueness of the price guide system, where they can change it in the backend, but there’s overall less tinkering because the price guides are less visible,” Pedersen said.
As a result of that greater transparency, the wave of price guide reductions began first in Melbourne as the prospect of interest rate increases was floated earlier in the year, said Pedersen.
With the outbreak of war in the Middle East and subsequent fuel crisis and inflationary pressures since then, buyers have had less appetite for ambitious house prices that vendors are setting, he said.
While the gap between guides and sale prices is roughly about five per cent in Sydney, it’s closer to zero in Melbourne. Despite that, guides in both cities are being lowered en masse.
“The power balance has swung more toward the buyers,” Pedersen said. Because Melbourne has been more buyer friendly in recent years, the swing of the pendulum toward buyers has been most noticeable in Sydney.
“There’s been a lot of world events going on and that’s all been playing into the mentality of buyers,” he said, adding that the apprehension in the market relates to job security, increasing prices and potential interest rate hikes before settlement.
“People are getting quite stressed, as they should be, and it’s causing all these negative forces in the demand side of the market,” he said.“There’s a lot of negative energy out there which is withholding the animal spirits,” Pedersen said.
Independent economist Saul Eslake agreed the converging global events and flow on local effects had dampened the housing market. While some vendors had lowered their guides accordingly, many appear to be refusing to lower their expectations.
An auction clearance rate of 60 per cent is typically considered a balanced market – well above Sydney’s 54 per cent and Melbourne’s 56 per cent at the end of March.
“A clearance rate near 50 per cent tells you that vendors are yet to twig to the fact that market sentiment has changed, they’re reluctant to sell at the prices buyers are willing to bid.”
“A market characterised by low auction clearance rates, falling prices and falling turnover, is a market much more favourable to buyers,” Eslake said.
Eslake said that while property investors were likely to be worse off if they needed to sell, the trend was a rare positive development for people in the market to buy a house, especially first home buyers. Investors were likely to be worse affected than owners selling to upsize.
“Many see it as a bad thing when housing prices go down, but if we have a problem of housing being too expensive for a growing proportion of the community, surely the solution is cheaper housing,” he said.
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Elias Visontay is a National Consumer Affairs Reporter at The Sydney Morning Herald and The Age.Connect via email.