Melbourne’s auction clearance rates slipped below 40 per cent on four weekends in spring.

The unprecedented results, recorded on the last weekend in September and three weekends in November, represent the city’s lowest figures reported since Domain records began in 1997.

On Saturday, the first day of summer, Melbourne’s preliminary clearance rate was 45 per cent, which was up from 38.6 per cent a week earlier but could be revised as more results trickle in.

Melbourne auction clearance rates in November

Date Clearance rate Scheduled auctions Reported results 3.11.2018 34% 153 150 10.11.2018 42.6% 949 947 17.11.2018 39.3% 1112 1113 24.11.2018 38.6% 883 861

Despite the drop in properties selling under the hammer, Domain senior research analyst Nicola Powell highlighted recent data that showed more homes were selling in post-auction negotiations.

In September, seven in 10 Melbourne properties scheduled to go auction either sold under the hammer or within eight weeks of the auction. The remaining 30 per cent were either withdrawn from sale, still on the market or their sale was not reported.

Dr Powell said buyers were adjusting to a different lending environment, with some not able to get their finances across the line.

“I also think buyers are becoming more wary of buying at auction because they don’t want to overpay, so having that post-auction negotiation gives them a bit more flexibility,” she said.

After five years of astounding price growth, Melbourne’s spring selling season was heavily impacted by weak housing forecasts, tough lending conditions, an exodus of investors and negative consumer sentiment.

“The change has come about so quickly,” said Joanne Royston, director of RT Edgar’s Williamstown branch. “In my whole career, I’ve never seen the market correct itself the way it has this year.”

While having one or two bidders at an auction was the new norm, Ms Royston said there were usually other interested buyers who were not able to secure finance in time.

“Although traditionally auction campaigns are over a four-week time period, we may now adapt to five or six-week processes going into the new year to give people more time,” she said.

Ms Royston said she was also speaking to some vendors about allowing bidders to make an offer subject to finance at auction.

“It’s a very interesting market, and we’re all trying to adapt to get the best results,” Ms Royston said.

In the inner city area of Stonnington, the shrinking pool of investors has been a major factor behind falling clearance rates, said Hocking Stuart auctioneer Grant Wallace.

“The area itself is a huge investment area with high yields for apartments,” Mr Wallace said. “Everything I’ve passed in in the last two months has been apartments.”

But he noted all but one of his listed properties had gone on to sell, usually within three weeks of the auction.

Some investors and developers selling properties they bought in the past two years were taking a price hit, Mr Wallace said. In South Yarra, a three-bedroom brick home at 54 Alexandra Street sold last month for $1,699,500, $80,000 below the price it fetched in late 2016.

Prospective buyers and sellers were cautious, Mr Wallace observed, and uncertain about how to navigate the current housing market, particularly amid the fallout from the recent royal commission into banks and financial institutions, and with a federal election looming early next year.

“It’s like you’re in a maze trying to find your way out,” he said.

Mr Wallace expected the property market to settle in 2019. “But I don’t think it will be growing – it has plateaued.”