A credit squeeze, rising rates and falling sentiment are contributing to clearance rates slipping below 50 per cent in Melbourne, the lowest in eight years and down more than 70 per cent for the same weekend last year, and just over half for Sydney.

Agents claim top-end properties in prime Melbourne and Sydney locations selling for north of $7 million to self-funding local and overseas buyers that do not need to borrow remain resilient.

Ms Bloom blames the slowdown for a sharp increase in the number of private – or boardroom – auctions and sales by expressions of interest rather than the more familiar street auctions.

Agents that last year sold 80 per cent by auction and 20 by private sale have reversed the ratio in recent months, she said.

Mark Wridgway, a director of RT Edgar, said: "These are challenging conditions. Triple-A locations are selling well but it's harder in the rest of the market."

Claudio Perruzza, a director of Biggin Scott, added: "Slower sales means there is no buyer urgency. Buyers are often gun shy on auction day. But quality continues to sell."

Preliminary results show about half of the properties auctioned across the nation's capitals sold, according to CoreLogic, which monitors sales and prices.

Kevin Brogan, CoreLogic's national residential auction market commentator, said Melbourne's market is "resilient" because the percentage of sales were around the same as last week despite the number of properties on offer increasing more than 54 per cent to 1700.


Adelaide had a clearance rate of about 68 per cent, higher than for the same weekend last year, from 133 auctions.

Brisbane slumped to about 34 per cent, compared to about 45 per cent for the same time last year.

The market outlook remains soft because tight lending conditions have dramatically decreased the number of property investors and made it a lot tougher for owner occupiers.

Increasing negative equity, which happens when price falls reduce property value to less than the mortgage, and fears about possible crackdown on negative gearing incentives are also weakening sentiment.

Lenders continue to squeeze interest-only terms and tighten all borrowers' affordability and serviceability criteria.

But below 4 per cent rates, double-digit discounts and lucrative cash incentives are being offered to borrowers that meet standards, typically working couples with a 20 per cent deposit.

That is creating opportunities for first-time property buyers and existing borrowers with equity that are seeking cheaper rates or better conditions.

For example, ANZ will this week announce improved rates for borrowers seeking to switch and are expanding the eligibility criteria.

CBA, the nation's largest lender, is also increasing discounts for borrowers, with the biggest cuts available for biggest discounts.