Melbourne Auctions Are Out of Control - Here's Why (And How to Win)
In This Week’s How's The Market | Edition 131
Melbourne Auctions Are Out of Control - Here's Why (And How to Win)
Iconic Edwardian Retreat in the Heart of Prahran
RBA says Australian economy is at risk despite its strength
Melbourne Auctions Are Out of Control - Here's Why (And How to Win)
Picture this: you've been house hunting for months, armed with pre-approval and endless Saturday morning inspections. You've missed out on three auctions in a row, watching properties sell for $100,000+ over their quoted range. You're starting to wonder if everyone else has access to some secret money tree while you're left feeling defeated, watching the market spiral beyond your reach.
If this sounds familiar, you're not alone. Right now, Melbourne's auction scene resembles a feeding frenzy more than a civilized property market - and there are very specific reasons why.
The Numbers Don't Lie
Last weekend alone, 1,365 auctions took place across Melbourne with a clearance rate hitting 59.6% according to SQM Research. Compare that to the same weekend last year: 1,341 auctions but only a 49.5% clearance rate.
Here's the kicker - it's not just the numbers that have changed, it's the trend direction. This time last year, clearance rates were heading downward into the end of year slump. Now? They've been climbing steadily since January 2025, creating a completely different buying environment.
What does this mean on the ground? Last year, half the properties were passing in with single bidders negotiating against vendors. Today, multiple competitive bidders are the norm, turning auctions into emotional battlegrounds where logic often loses to fear.
Three Forces Driving the Madness
1. The Underquoting Epidemic Gets Worse When Markets Rise
Agents aren't necessarily trying to deceive you (though some are). The reality is that when property prices are rising rapidly, using comparable sales from 4-6 months ago becomes meaningless. Agents are genuinely shocked when properties sell for $200-300k above their estimates because recent sales data simply can't keep pace with current market sentiment.
The result? Quoted ranges that feel like complete fiction, leaving buyers unprepared for the real bidding battlefield.
2. First Home Buyer Guarantee Changes Create Market Hysteria
The recent changes to the First Home Buyer Guarantee scheme have created a ripple effect that's reached far beyond first-time buyers. Even people not actively in the market are talking about it at dinner parties. This widespread awareness has created a collective sense that "something big is happening" in property, driving more participants into an already crowded market.
3. Interest Rate Cuts Change Everything
The auction clearance rate trend started shifting in direct alignment with the first interest rate cut in February 2025. Each subsequent cut has amplified the effect, moving the market from single-bidder scenarios to multi-bidder competitive environments almost overnight.
The Christmas Deadline Pressure Cooker
Here's what's making everything worse: the rapidly approaching Christmas deadline. Buyers wanting to move before Christmas have essentially four weeks left to secure and settle a property. This impossible timeline is pushing people to make desperate decisions, overpaying just to get deals done.
Factor in that most conveyancers disappear from mid-December, and you've got a perfect storm of time pressure driving irrational market behavior.
How to Win Without Overpaying: The Strategic Patience Approach
Despite the chaos, smart buyers are still securing great properties. Here's how:
Don't Wait for Auction Day
If everything's selling at auction with multiple bidders, don't wait for the auction. Attend first inspections, build relationships with agents, and position yourself for off-market opportunities before properties even hit the market.
Master the Pre-Auction Offer
Recent case study: Two identical properties, both quoted $1.29M-$1.39M. One went to auction and sold for $1.665M after emotional bidding. The other accepted a pre-auction offer for significantly less because the vendors hated the auction process. Strategic patience and speed eliminated the competition.
Know Your Auctioneer
Attend 5-10 auctions before you need to bid. Each auctioneer has different styles and signals. Some won't clearly announce when a property is "on the market" - you need to know to ask. Understanding the theater prevents costly mistakes.
Stay After You Lose
When you miss out at auction, don't storm off in frustration. Hang around for five minutes and speak with the other agents present. They often have properties coming up that they've held back during the current campaign. You've just proven you're a serious, qualified buyer - leverage that.
The Three Numbers That Matter
When evaluating any auction property, focus on three key figures:
Top of the quoted range
The reserve price (often revealed day-of)
What it actually sells for
The gap between these numbers tells you everything about market conditions and agent accuracy.
The Bottom Line
Melbourne's auction market isn't broken - it's just operating under extreme conditions driven by rising prices, rate cuts, policy changes, and time pressure. The buyers winning in this environment aren't necessarily the ones with the most money; they're the ones with the best strategy.
FOMO is real, and it's expensive. But "strategic patience" - being deliberate about when to strike hard and when to step back - can be your secret weapon in a market where everyone else is losing their heads.
The market will normalize eventually. Your job is to secure the right property at the right price without getting caught up in the emotional tsunami that's currently washing over Melbourne's auction rooms.
Ready to navigate this chaos with a clear strategy? The smart money isn't just spending more - it's spending smarter.
Stay ahead of the market - get the real auction results every week!
What The Agents Are Saying
Agents are saying buyers are turning up ready to fight for properties - and paying prices no one expected just a few months ago.
They’re seeing homes sell not just well over the top of the quoted range, but tens of thousands over reserve as competitive bidding takes hold.
Several agents mentioned that vendor reserves have been reasonable, but the market is pushing prices higher on its own - creating those strong clearance rates we’re seeing week after week.
Interestingly, many vendors who were once hesitant about auctions are now choosing to take their properties online because they’re confident the competition will deliver a premium result.
This shift is a complete turnaround from last year, when more vendors preferred quiet, off-market sales to avoid the risk of passing in.
The Wow Factor!
40 Irving Avenue, Prahran, Vic 3181
Iconic Edwardian Retreat in the Heart of Prahran
Why it WOWs:
Architecturally rebuilt Edwardian home
Soaring 2.9m+ ceilings & steel-framed doors
Designer kitchen with AEG & Miele, Argentinian granite, butler’s pantry
Heated polished concrete floors & gas log fire
Private NE courtyard & lush landscaped gardens
Lavish main suite with skylight ensuite in Italian Panozzo Primo marble
Two additional robed bedrooms & marble bathroom
Secure off-street parking, alarm, CCTV & zoned RC/air-conditioning
Minutes to High St shops, restaurants, trams, parks & schools
Price guide : $3,250,000
In The Media
RBA says Australian economy is at risk despite its strength
Australia's economic future hangs in the balance as mounting global uncertainties threaten to derail the nation's recovery from its worst inflation crisis in decades. Reserve Bank Governor Michele Bullock delivered a stark warning this week: despite solid progress taming post-Covid price surges, the road ahead is fraught with danger.
From trade war tremors between the US and China to supply chain chaos sparked by international conflicts, Australia's economy faces headwinds that could shatter confidence and slam the brakes on growth. The RBA chief painted a sobering picture of an economy walking a tightrope one misstep from global tensions could send shockwaves through mortgage rates, job markets, and household budgets.
The warning comes as 2024-25 marks Australia's weakest growth year since the early 1990s, excluding the pandemic. With productivity stagnant and labour costs soaring, the nation's economic engine is sputtering just as geopolitical storms gather strength. Tariff threats, energy price volatility, and political upheaval across Europe and the Middle East are creating a perfect storm of uncertainty.
For millions of Australian families still reeling from years of punishing inflation, the message is clear: the economic recovery that seemed within reach may be more fragile than it appears. As borrowers hold their breath for potential rate cuts now sitting at just 10% probability Bullock's blunt assessment serves as a reality check that Australia's economic resilience will face its greatest test yet in the years ahead.
Final Thoughts
Melbourne’s auction market isn’t slowing down – and waiting won’t make it easier.
The key isn’t to outspend everyone else, but to outsmart them. Stay calm, move fast when it matters, and focus on securing the right property at the right price.
If you or someone you know would like assistance to buy this year, book in a call and we can discuss if we can help.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
