Half of Auctions Failed. Why Hasn't the Housing Crash Hit Yet?

Summary

Australia’s housing market is weakening, but the presenter argues that falling prices and weak auctions have so far produced a prolonged downturn rather than a rapid nationwide crash. The main explanation is that buyers’ borrowing capacity and willingness to pay have weakened faster than many sellers’ price expectations, while many owners can still afford to reject low offers and hold their properties.

The presenter says the next 12–18 months will depend on whether owners can keep carrying their mortgages and whether buyers can obtain finance. More forced selling could make the downturn accelerate, but that outcome is presented as a risk, not a certainty.

Key Market Data

• Preliminary auction clearance rate: 48.2%, versus 67.4% at the same time a year earlier. This is an early figure and may be revised as more results are reported.
• National home values: 5.2% below the March peak.
• September dwelling values: down 1.1% for the month, marking a sixth consecutive monthly decline.
• Estimated national home sales over the prior three months: down 19.1% year over year.
• Capital-city median selling time: 39 days, up from 23 days a year earlier.
• Capital-city new listings: down 9.2% year over year, while total advertised stock was up 23%. The presenter attributes the divergence to homes taking longer to sell.
• The presenter notes that a long weekend in several states may have affected auction activity.

A failed auction does not necessarily mean a property’s value has fallen by a particular amount. It means no deal was reached on terms the seller accepted that day. Prices are ultimately informed by completed comparable sales, and a property passed in at auction may still sell later.

Rates, Household Finances, and Downside Risk

• The Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points to 4.6% on 29 September. The cash rate is not the same as a borrower’s mortgage rate; lenders set mortgage rates separately.
• The presenter cites an RBA October Financial Stability Review estimate that about 2% of variable-rate owner-occupier borrowers could not cover scheduled repayments and essential expenses from income. Most of those borrowers were estimated to have savings to cover the shortfall for at least six months if they cut spending to essentials.
• The review’s estimates relate to the first half of 2026 and use a mix of lagged data, estimates, and projections, so they do not measure the immediate effect of the latest rate rise.
• The presenter says bond markets were suggesting interest rates could rise further, but does not give a specific bond yield or rate forecast.

The video distinguishes cash flow—income and savings used to pay bills—from equity—property value minus debt. Equity may help an owner exit by selling, but it does not pay the mortgage instalment.

The presenter discusses a “double trigger” framework from historical RBA research:

1. Loss of repayment capacity: Unemployment, reduced income, or high repayments can make a loan harder to service; a repayment buffer reduces this risk.
2. Insufficient equity: Owing more than the home could sell for can make financial distress more likely to result in losing the property.

The proposed downside pathway is:

Tighter finance or income losses → more owners forced or willing to sell → lower accepted bids become comparable sales → falling values erode equity → refinancing or selling becomes harder for exposed borrowers.

The presenter stresses that this chain could break if household finances hold up, buyers regain capacity, or sellers adjust prices enough for transactions to resume.

Suggested Monitoring and Practical Checks

The presenter recommends:

• Track several weeks of final auction results, not one preliminary clearance-rate reading. Compare these with selling times and recent comparable sales.
• Look for stabilization across more completed sales, shorter selling times, and recovering final clearance rates. A single stronger auction weekend is not enough.
• Monitor payment stress and urgent selling consistently, using the same measure and source over time. Do not treat a distressed listing, withdrawn auction, or failed auction as equivalent to a completed sale or repossession.
• Owners should test their budget against current repayments and allow for a realistic sale timeline. The cited capital-city median is 39 days, and an individual property may take longer.
• Buyers should keep finance approval current and ensure repayments remain manageable if conditions tighten.
• Borrowers already under pressure should contact their lender early, before missing a payment.

These are monitoring and risk-management suggestions, not a recommendation to buy, sell, or wait.

Assets, Instruments, and Markets Mentioned

• Australian residential property and housing auctions
• Home loans and variable-rate mortgages
• RBA cash rate
• Bond markets

No stock or ETF tickers are mentioned.

Disclosures and Sources

The presenter says they are not a financial adviser, acknowledges they could be early in their interpretation, and describes the acceleration scenario as a risk rather than a certainty. The video also promotes a free Investor Accelerator workshop on property cycles.

Presenter and source list: The Investor Accelerator host (the channel context identifies the workshop as Jason’s); the Reserve Bank of Australia, including its October Financial Stability Review and a 2020 research paper by Michelle Bergman; Ray White’s Thomas McGlin, quoted via AAP; and Cotality/CoreLogic housing-market figures as referenced in the video.