Ray White Victoria and Tasmania chief auctioneer Luke Banitsiotis said committed buyers were still turning up despite the latest interest rate rise.
A fourth rate rise may not scare Melbourne buyers away from auctions this weekend – but it could cut how high they can bid.
Just 648 Melbourne homes are scheduled to go under the hammer this week, down 39 per cent from the same time last year, according to new REA Group data.
The Reserve Bank lifted the cash rate another 25 basis points to 4.60 per cent on Tuesday, its fourth increase of 2026.
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Saturday will also mark Melbourne’s first auction weekend under part of Victoria’s new property price transparency regime, with agents now required to publish final sale prices within seven days of deals becoming unconditional.
But compulsory seven-day reserve disclosure does not apply to this weekend’s auctions, with that requirement kicking in for auctions and fixed-date sales held from October 16.
There is little sign of auction volumes bouncing back immediately either, with 738 Melbourne homes scheduled for next week, 42 per cent fewer than a year ago.
REA Group senior economist Angus Moore said the cumulative impact of four rate rises was more important for buyers than the latest increase alone.
REA Group senior economist Angus Moore said the latest rate rise was more likely to reduce what buyers could afford than force them out of the market altogether.
He said Tuesday’s decision had been widely anticipated, meaning many house hunters had already allowed for higher rates in their purchasing decisions.
“The cumulative effect is much more important than the impact of just the one,” Mr Moore said.
“I wouldn’t expect to see a big impact just from this one.”
Instead, Melbourne was already showing the effects of four rate rises, with prices falling, homes taking longer to sell, clearance rates relatively low and auction volumes down from a year ago.
Buyers watch the auction of former prime minister Julia Gillard’s Altona home in 2022. Melbourne has 648 auctions scheduled this week, down 39 per cent from a year ago. Picture: Nicki Connolly
The damage has been particularly pronounced at the expensive end.
Mr Moore said Melbourne’s priciest quarter of homes had fallen about 8 per cent peak-to-trough, compared with about 2.5 per cent across the most affordable quarter.
But first-home buyers remained particularly sensitive to further rate rises because their smaller deposits meant they typically borrowed a greater share of the purchase price.
Mr Moore said another rate rise remained likely, although it could come this year or next, making a rapid market turnaround difficult.
“It’s hard to see prices turning around, and so conditions turning around, anytime soon,” he said.
Conditions were more likely to improve next year once interest rates had stabilised, he said.
Ray White Victoria and Tasmania chief auctioneer Luke Banitsiotis said every planned bidder at the agency’s Ballarat auctions still turned up after Tuesday’s rate rise.
Ray White Victoria and Tasmania chief auctioneer Luke Banitsiotis said committed buyers were already showing they would not necessarily disappear after another hike.
Ray White held auctions in Ballarat on Tuesday night after the rate decision, with every buyer who had indicated beforehand they intended to bid still turning up and doing so.
“Most buyers have invested time, energy and a bit of emotion into buying,” Mr Banitsiotis said.
“For the vast majority, if they’ve mentally prepared themselves to buy, I think they’re still going to be acting on that intention.”
He said buyers stretched closest to their financial limits were most exposed, including first-home buyers using the federal government’s 5 per cent deposit scheme and others borrowing a large share of the purchase price.
Melbourne buyer’s advocate Cate Bakos said some younger buyers and upgraders were returning to banks and brokers to check how much they could still borrow.
Prominent Melbourne buyers advocate Cate Bakos said the rise was already prompting some committed buyers to scramble back to banks and mortgage brokers to reconfirm how much they could safely spend.
Younger buyers and upgraders were particularly likely to be pushing against their borrowing ceilings when searching for a home, she said.
But higher rates were also having a counterintuitive effect.
Ms Bakos said some buyers fearful of further rises were bringing forward their purchasing plans rather than waiting and risking another reduction in borrowing capacity.
Real Estate Institute of Victoria chief executive Toby Balazs warned Melbourne could face a challenging weekend for auction clearance rates.
Real Estate Institute of Victoria chief executive Toby Balazs warned the rate rise could still make its presence felt immediately.
“I think it’s potentially likely to be a challenging weekend for auction clearance rates,” Mr Balazs said.
He said higher borrowing costs could force some prospective buyers to rethink what they purchased or put their plans on hold.
But buyers who already had finance pre-approval could face the opposite pressure, with an incentive to purchase before having their borrowing capacity reassessed at higher rates.
The weekend’s test will play out across a dramatically thinner auction market.
Craigieburn has Melbourne’s busiest schedule with 15 auctions, followed by Reservoir with 14, Glen Waverley with 13, Epping with 11 and Greenvale with 10.
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