Real estate agents are talking up momentum. Economists are flagging downside risk. One group is paid to generate activity, the other to model risk. Neither is lying, both are reading different parts of the cycle.
The question isn’t who’s right today. It’s what data would settle the argument. A market bottom isn’t a feeling, it’s a pattern in three numbers that move together and hold for at least eight weeks.
The three indicators that matter
First: clearance rates stabilise above 65 per cent for metro capital city auctions, tracked week-on-week across at least two months. Below 60 per cent signals forced selling or unrealistic vendor expectations. Above 70 per cent often precedes price acceleration. The 65-70 per cent band is where competitive tension exists without desperation on either side.
Second: days on market compress below the rolling 12-month average for the same suburb and property type. When stock moves faster than it did over the prior year, buyers are making decisions rather than waiting. If days on market stays flat or rises while agents talk up enquiry, it’s noise.
Third: new listings growth slows or turns negative while active stock-on-market plateaus. A bottom forms when sellers stop flooding the market because they believe the next quarter won’t be worse. Rising listings into weak clearance rates is capitulation. Falling listings with stable clearance rates is equilibrium.
The catch
- All three indicators must move together for eight consecutive weeks.
- One month of improved clearance rates during spring selling season is not a bottom, it’s seasonal.
- Stock-on-market data lags by two weeks in most metro markets.
- Days on market can be gamed by re-listing properties under new campaigns.
Why agents and economists see different things
Agents track pipeline and enquiry. An increase in buyer inspections or pre-auction offers feels like momentum because it’s forward-looking activity. Economists track settlement data, credit growth, and debt serviceability. Those numbers lag price action by one to three months and reflect constraints, not sentiment.
Both are correct within their own timeframe. The gap between them is where risk sits. If enquiry rises but credit conditions tighten, the momentum stalls before it reaches settlement. If economists flag stress but buyers keep bidding, the market has already moved.
The three indicators above close that gap. Clearance rates reflect real competition in real time. Days on market shows whether enquiry converts to contracts. Listings growth shows whether vendors believe the narrative or are testing it.
What derails a bottom
The most common false signal: one strong auction weekend during a low-stock week. Clearance rates spike because three properties sold out of four listed, not because demand surged. Always check total auction volumes alongside clearance rates. A 70 per cent clearance rate across 80 auctions is a signal. A 70 per cent clearance rate across 15 auctions is a rounding error.
Second: mortgage rates rise or serviceability rules tighten mid-cycle. Even if buyers are ready, credit availability can break momentum in two weeks. Watch the RBA’s confidence versus balance sheet reality for early signs.
Third: a policy shift that floods supply without matching demand. If housing targets and tax changes break the development equation, new listings can overwhelm absorption rates and push the bottom out another quarter.
Scenarios and what to watch
Base case: Sydney and Melbourne clearance rates hold between 62-68 per cent through spring 2026, days on market compress by 10-15 per cent versus the prior year, and new listings flatten by late October. That sequence confirms a bottom formed in late winter. Prices stabilise for 8-12 weeks, then edge up 2-4 per cent over summer.
Downside: clearance rates stay below 60 per cent, days on market extends, and listings rise as vendors who delayed through winter try to exit before Christmas. That pattern means the bottom is still ahead, likely landing in early 2027 after forced selling clears.
Upside: all three indicators turn positive by mid-September and hold through October. Prices lift 5-8 per cent by year-end as buyers who waited 18 months compete for limited stock. This scenario requires no rate rises and no credit tightening through Q4.
Next steps for decision-makers
If you’re buying: don’t chase momentum based on one weekend’s clearance rate. Wait for the three indicators to align across eight weeks, then move. The cost of waiting an extra month is lower than overpaying into a false bottom.
If you’re selling: list when days on market is compressing and clearance rates are stable, not when agents tell you enquiry is “picking up.” Enquiry without conversions means the market isn’t ready.
If you’re holding: track the data yourself. Use Domain or CoreLogic suburb reports to monitor days on market week-on-week. Cross-reference clearance rates from multiple sources because individual agencies cherry-pick their own results. Set a threshold for action and stick to it.
Subscribe to the newsletter for weekly data tracking on these three indicators across metro markets.
General info, not financial advice.
