Auction clearance rates jumped immediately after the Reserve Bank’s second interest rate cut of the year, in a sign home buyers are regaining confidence.

The volume of auctions held in capital cities surged more than 40 per cent to 2512 last week, with 71.3 per cent reported as sold, according to property data analytics firm Cotality.

That’s the second-highest preliminary clearance rate in 2025, only topped by the 72.1 per cent rate in the week following the RBA’s February rate cut.

On the ground, it’s clear confidence is returning but affordability constraints remain.

Many vendors still had to adjust their reserves lower to get a sale over the line, observed Sydney-based auctioneer Clarence White.

“We got more things done, but I wouldn’t necessarily say that prices are knocking it out of the ballpark,” he told AAP.

Strength in the Melbourne market underpinned the recovery, with almost three quarters of homes under the hammer recording a successful auction.

Meanwhile, Sydney’s preliminary clearance rate passed 70 per cent for the first time in 10 weeks.

While buyer confidence improved, sellers’ expectations are in many cases still above what the market is willing to pay.

Property owners who bought a home within the last few years were holding out for sale prices significantly above what they paid, to compensate for charges such as stamp duty, Mr White said.

However, in most cases they are selling for about the same price they paid.

“One of the things we’ve been battling for quite a while is sellers with expectations above the market,” he said.

He anticipates prices to recover throughout the year as interest rates come down further and buyer sentiment continues to improve.

But economic uncertainty was still having an impact.

Confidence crashed after Donald Trump’s ‘liberation day’ tariffs smashed financial markets, with some clients telling Mr White they had lost $50,000 in a week.

Clearance rates drifted lower following the February rate cut, as “exuberance” left the market, before finding a floor at 64.2 per cent in the last week of April, said Cotality research director Tim Lawless.

The Housing Industry Association reported new home sales rose 16.5 per cent to a 12-month high in April, following the RBA’s first cut, which shaved approximately $90 off monthly interest repayments for a borrower with a median mortgage of about $600,000.

As well as increased borrowing capacity, low unemployment, rising real wages and ongoing population growth helped boost activity, said HIA economist Maurice Tapang.

“New home sales data have signalled that home building may be past its trough, confirming our expectations of a pick-up in activity in 2025,” he said.

Australian home values rose 0.3 per cent in April, setting a record median price of $825,349, Cotality found.

After a brief downturn at the end of 2024, it was the third consecutive month of growth.

Jacob Shteyman
(Australian Associated Press)