Australia’s auction market has reignited following back-to-back interest rate cuts, with clearance rates jumping and bidding intensity rising across major capital cities. While this spells good news for sellers, buyers now face stronger competition and rising prices.
In Sydney and Melbourne, clearance rates rose notably in May — up to 65.9% and 67.4% respectively. According to Dr Nicola Powell, chief of research at Domain, the jump is more than just seasonal. “Sentiment is a game changer,” she said. “Buyers feel more confident, and that’s feeding straight into auction results.”
Rodney McLoughlin notes that although we’re not in full boom territory, the shift in buyer behaviour is evident. Properties are attracting more bidders, and FOMO is quietly creeping back into the market — particularly for homes priced under $2 million.
Competition Heats Up, but Prices Remain Grounded (for Now)
Auctioneers across the country are seeing more aggressive bidding, especially in Sydney’s inner south and Melbourne’s inner east. However, experts stress that while clearance rates are up, the broader market is still measured. Buyers remain price-conscious, especially above the $1.5 million mark.
“Properties still need to be priced right,” says McLoughlin. “Buyers are competing, but not at any cost. The post-COVID frenzy is behind us — this is a more rational, calculated market.”
Construction Costs Reach Record Highs
While buying is heating up, building remains a financial challenge. New data shows the average cost of constructing a home in Australia has hit $519,941, driven by labour shortages and rising material prices. Concrete is up 20%, timber by 5%, and plumbing and electrical supplies also surged.
Rodney McLoughlin warns that these pressures may further limit the supply of new homes — placing more demand on established housing stock, which could push prices even higher in high-demand areas.
The $1 Million Milestone: Average Home Values Hit New High
The average Australian home is now worth over $1 million for the first time. In NSW, it’s even higher — at $1.25 million. Queensland has overtaken the ACT, with strong growth in Brisbane and the Gold Coast pushing values upwards.
Despite government efforts to increase supply, experts say affordability remains a structural issue. The National Housing Accord’s goal of 1.2 million new homes by 2029 is likely to fall short by over 260,000 properties.
What to Expect Next
Economists are now forecasting another rate cut as early as July, which could add further fuel to buyer demand. McLoughlin advises buyers to be ready: “There’s still value out there — but you’ll need to be decisive and well-prepared to secure the right property.”
Real Estate Newsletter
This article is a curated summary of various news stories from the past week, offering insights and updates on the real estate market. 13 June 2025.
Rodney McLoughlin is a trusted real estate professional with deep insights into the Australian property market. For personalized advice and market expertise, reach out to Rodney today.
