Sydney's worst auction sales rates since the pandemic | 9 News Australia

Home buyers and investors seem to be pulling out of the property market amid Sydney's worst auction sales rates since the middle of the pandemic.Eddie Meyer investigates what's behind it.

It's a telling statistic.In the past three weeks in Sydney, more properties have passed in at auction than have been sold.While this week's auction result figures are still being compiled, last week the clearance rate was just 31%.The week before, around 37 % of properties sold at auction.Compare that with last year when more than 65 % were selling.

The last time we actually saw this occur was in the COVID lockdowns of 2020.So this is a pretty bad situation for the market right now.

Aside from 2020, the last time clearance rates were this low was 2008.It seems investors have been spooked by recent changes to negative gearing and capital gains tax.And with rising interest rates, even home buyers are not seeing this as a buyer's market.

We've got to remember those people who jumped in on the 5 % deposit scheme last year.Many of those would be in negative equity right now.And that is a risk.You buy in a falling market, you risk going into negative equity.And quite frankly, that's the second worst financial position to be in outside bankruptcy.

So how long could this last?Louis Christopher believes the downturn could last two years unless interest rates start falling again or the government reverses course on its tax changes.