Auction remains a viable sales method in Melbourne’s eastern suburbs, the Mornington Peninsula, and the Bellarine Peninsula, but requires careful consideration in the current market. While vendor confidence has increased with rising listings (Raine & Horne reported listings up nearly 40% since December 2025), recent RBA rate hikes have introduced caution and dampened buyer urgency (Domain). Clearance rates are tracking in the low-to-mid 60s, meaning a significant proportion of properties are being passed in.
Your agent’s recommendation to auction is logical given the increased listing volume we’ve seen through late 2025 and early 2026. However, the February and March 2026 interest rate increases have undeniably shifted the balance, making a measured approach to auction strategy more critical than ever. It’s no longer a case of simply putting a property up for auction and expecting multiple bidders; a more nuanced understanding of buyer behaviour is essential.
When does auction still work?
Auction is still favoured for properties in suburbs with consistently high clearance rates – generally above 65% – and those with broad buyer appeal. If you need certainty of a sale by a specific date, or your property has unique features that make pricing difficult, auction can be effective. The eastern suburbs of Melbourne, with their established auction culture, continue to see strong results, but even here, results are more variable than in recent years.
What’s happening with passed-in properties?
With clearance rates in the low-to-mid 60s, approximately 35–40% of Melbourne properties that go to auction do not sell on the day. These properties typically sell within a few weeks via private negotiation. However, vendors should be prepared for buyers to anchor their offers below the reserve price, knowing the vendor’s position is weaker than it might appear. Establishing a clear post-auction strategy and walk-away price *before* auction day is crucial.
How do current conditions affect the auction process?
Open for inspection attendances are up 3% year-on-year (Raine & Horne), indicating continued buyer interest. However, the increased caution following the RBA rate hikes means fewer buyers are actively competing for each property. This translates to a more price-sensitive market, where buyers are carefully assessing value and less willing to overpay. As Mathew Tiller of LJ Hooker notes, buyer activity moderates rather than stops with interest rate rises.
The clearance rate gap
The gap between vendor expectations and buyer willingness to pay is the biggest challenge right now. Vendors who have held off listing for 12-18 months may still be anchored to prices seen in earlier, more buoyant conditions. Buyers, on the other hand, are factoring in higher borrowing costs and a more uncertain economic outlook. Bridging this gap requires realistic pricing and a transparent auction campaign.
Frequently asked questions
Will a passed-in property sell for less than if it had sold at auction?
Not necessarily. While buyers negotiating after a pass-in often start below the reserve, a well-managed post-auction campaign can still achieve a strong result. Having a clear walk-away price and understanding the highest bidder’s position (they have first right to negotiate under CAV rules) is vital.
Is now a good time to auction, given the interest rate rises?
The market has moderated, but demand hasn’t disappeared. Listings are up, indicating vendors are confident, and open for inspection numbers remain healthy. A strategic auction campaign, with realistic pricing and a strong marketing plan, can still be successful.
What if my property doesn’t attract many bidders?
A lack of competition is a clear signal to reassess your strategy. Your agent should have a robust post-auction plan in place, including a clear understanding of the highest bidder’s position and a willingness to negotiate. Don’t be afraid to adjust your expectations.
How important is the agent’s buyer database?
In a more cautious market, an agent’s existing network of qualified buyers is invaluable. A strong database demonstrates their ability to generate genuine competition and reach potential purchasers who may not be actively looking online. Ask to see evidence of their database and recent sales to similar buyers.
Questions to ask your agent
- Can you show me comparable sales in my suburb within the last 6 months, and what price range did those properties achieve?
- What is your post-auction strategy, and what price would you advise me to walk away at if the property passes in?
- How many active buyers do you have on your database who are specifically looking for a property like mine, and can you provide details?
This article contains general market information based on data current as at April 2026. It does not constitute financial, legal, or real estate advice specific to your property or circumstances. For an appraisal and tailored advice, speak with a Fletchers agent in your area.