Low Melbourne clearance rates show investors 'all but gone' from market

Melbourne's property market is experiencing a significant downturn, with auction clearance rates plummeting to their lowest point in five years. Last weekend, only 50.2 percent of properties listed for auction in the city were sold, a figure that experts say reflects a sharp decline in investor confidence.

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It directly hit my investment portfolio

Real Estate Institute of Victoria CEO Toby Balasz described the low clearance rate as a barometer of market sentiment, indicating a lack of confidence among buyers, sellers, and investors. He stated that rates need to be much higher to suggest a healthy market.

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I wouldn't say I am a fan of Labor but I do appreciate their courage to take this step because hopefully this is doing the job it's supposed to

Buyer's advocate Cate Bakos pointed to consecutive interest rate rises and cost of living pressures as initial factors contributing to a falling clearance rate in early 2026. However, she noted a dramatic shift after May 12, directly linking the downturn to recent federal budget announcements. Bakos observed that investors in established areas have largely withdrawn from the market, a trend she described as "all but gone."

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There has been some pretty troubling data released in terms of the clearance rates. We want to see them obviously much higher than what they are at the moment and that would suggest that there's probably a lack of confidence in the market.

These changes, particularly the proposed abolition of negative gearing for existing residential properties purchased after budget night and a revised capital gains tax discount, are forcing investors to re-evaluate their decisions. Property investor Yuki He, who bought her first investment property two years ago, stated the budget changes directly impacted her portfolio. She is now facing difficult decisions as falling property prices and ongoing interest payments mean she is losing money on her investment.

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But, we saw a dramatic change after the 12th of May and that was entirely down to the budget announcements. Investors in established locations are pretty much all but gone.