The downturn is changing the economics of selling property

Australia's housing correction is beginning to create a problem that does not appear in a home value index.

The cost of getting a property sold is rising.

Not necessarily because photography, portals or auctioneers suddenly cost more, but because properties are taking longer to transact, buyers have more negotiating power and agents are having to work harder for outcomes that were considerably easier to achieve a year ago.

Cotality's September Housing Chart Pack shows the median selling period has stretched to 39 days, compared with 28 days a year earlier. Median vendor discounting across the capital cities has widened to 4.2 per cent, while total advertised listings have risen above 139,100, up 18.1 per cent over the year.

National sales volumes were down 2.7 per cent over the year to August, with capital city transactions down 5.2 per cent.

At auction, the change is even more pronounced.

The combined capital city final clearance rate was 49.3 per cent for the week ending 6 September, compared with 70 per cent in the corresponding week last year. Auction volumes were down 32.6 per cent year on year.

Of the unsuccessful campaigns recorded by Cotality, 480 properties passed in while 245 were withdrawn.

That matters.

It suggests the problem is frequently not that sellers have abandoned the idea of selling, but that buyers and vendors are failing to agree on price.

And that gap has consequences for agency businesses.

The first warning is coming from inside agencies

The Australian reported over the weekend that Highland chief executive David Highland said agents within his business were losing money on some marketing campaigns and that the group was reviewing costs including signage and brochures.

The report also spoke with businesses providing services around property campaigns, including styling and property marketing, which described softer bookings and campaigns extending for longer periods.

That reporting should be understood for what it is.

It is evidence of what some operators are experiencing, not proof that every Australian agency is losing money on campaigns.

But the broader market data helps explain why those pressures can emerge.

An agency commission may be calculated as a percentage of a sale price, but one of the largest variable costs inside a sales business is time.

A listing that sells after three weeks of buyer work is a very different commercial proposition from one that requires two months of inspections, vendor meetings, database calls, revised price conversations, campaign changes and negotiations before an exchange is secured.

Even where the vendor directly funds advertising, the agency carries much of the labour cost of a longer campaign.

That makes the current increase in days on market more than a property statistic.

It becomes an agency productivity statistic.

Auction campaigns are being reconsidered

The changing economics can also be seen in the way auction campaigns are playing out.

New analysis released by Domain found a substantial rise in properties originally launched to auction subsequently converting to private treaty.

In Sydney, the proportion of auction-launched listings converting to private treaty increased from 24.9 per cent in February to 56.3 per cent in July.

Melbourne moved from 29.3 per cent to 58.1 per cent over the same period.

Across Sydney, Melbourne, Brisbane, Adelaide and Canberra, more than half of auction-launched listings are now converting to private treaty during their campaigns, with Domain describing the trend as a response to softer buyer demand and greater negotiating power.

This does not mean auction has stopped working.

Where an agent has several genuine buyers competing for a scarce property, auction remains capable of creating price tension and producing a strong result.

The risk is when the competition never arrives.

In a stronger market, an auction campaign could create urgency because buyers believed other buyers would act.

In the current market, the agent increasingly needs evidence that the competition actually exists.

Without it, an auction can expose the absence of buyer depth rather than manufacture it.

The vendor meeting is becoming more important

This changes the job at the listing presentation too.

The most commercially attractive listing is not necessarily the property carrying the highest potential commission.

It is a property that has a realistic probability of selling.

That places more importance on whether the agent and vendor are genuinely aligned on price before the campaign begins.

An unrealistic reserve or price expectation can create weeks of additional work while a property slowly accumulates days on market.

The longer that continues, the more difficult the campaign can become.

Buyers see the listing ageing.

Vendor confidence deteriorates.

Price conversations become harder.

Marketing may need to be refreshed.

The property can move from auction to private treaty.

The agent's original appraisal then becomes part of a much larger conversation about why the market has not responded.

That is not a new challenge in real estate, but it becomes much more expensive when it happens across a large proportion of an agency's listing book at the same time.

Suppliers are exposed to the same cycle

Real estate's sales economy extends well beyond the agent.

Photographers, floorplan providers, stylists, signboard companies, auctioneers, videographers, copywriters, printers and digital advertising businesses all depend to some degree on transaction activity.

When fewer properties are listed or vendors become more cautious about campaign expenditure, those businesses feel the slowdown as well.

Cotality recorded 1,615 auctions scheduled across the combined capitals for the week ending 13 September, still 32.8 per cent below the equivalent week in 2025.

Melbourne's scheduled volume was down 45.5 per cent year on year, while Sydney was down 25.7 per cent.

A fall in auction volume of that scale does not affect auctioneers alone.

It reduces the number of campaigns around which an entire group of real estate services operates.

Cutting marketing is not necessarily the answer

There is an obvious temptation in a slower market to reduce campaign expenditure.

That can be rational where spending has become habitual rather than productive.

But a difficult market is also a dangerous time to make a property less competitive.

The relevant question is not simply whether a campaign is cheaper.

It is whether each component contributes to a transaction.

Good photography can still matter.

Database marketing still matters.

Presentation still matters.

Buyer follow-up may matter more than it did in a rising market.

The pressure therefore moves towards accountability.

Agents and suppliers need to be increasingly clear about what each element of a campaign is intended to achieve.

The next test is interest rates

The Reserve Bank has increased the cash rate by 75 basis points during 2026 and is currently holding it at 4.35 per cent.

The Board has said inflation remains too high and that the earlier increases are still working their way through the economy.

Its next monetary policy decision is scheduled for 29 September.

Until there is greater certainty around borrowing costs, buyers have little reason to manufacture urgency themselves.

That places more of the burden back onto the agent.

For agency principals, this market may therefore require a different measure of performance.

Listings won will always matter.

Commission earned will always matter.

But conversion rate, average campaign duration, cost per sale and the amount of agent time consumed by unsold stock may become just as important.

Australia's housing correction is not only resetting prices.

It is beginning to reset the economics of the businesses that sell them.