The past auction weekend was a tale of two cities between Sydney and Melbourne, with the latter reporting a substantial surge in auction withdrawals.

The latest market report from CoreLogic showed auction markets across the capital cities have recorded a preliminary clearance rate of 63.3%, the lowest level of take-up since the height of the pandemic in July 2020.

Melbourne was the biggest drag over the weekend, with a clearance rate of 48.6%. The city hosted 1,067 auctions, but almost 50% were withdrawn. This ultimately impacted Melbourne's clearance rate.

On the other hand, Sydney recorded a clearance rate of 81.7% for 529 auctions. This is the fourth consecutive week of Sydney reporting an above 80% clearance rate.

The two different outcomes in Sydney and Melbourne indicate the importance of allowing property inspections amid the COVID-19 lockdowns.

In Sydney, property inspections are allowed provided the prospective buyer secures a permit. This option is currently not available in Melbourne.

"The divergence in the auction clearance rate tells the story about how important it is for prospective buyers to be able to physically inspect a property in order to make such a high commitment decision as buying a home," Mr Lawless said.

Overall, 1,977 auctions were held across all capital cities. Adelaide registered the highest clearance rate at 87.1% for 133 auctions.

The overall clearance rate has fallen to its lowest since June 2020 as restrictions in Melbourne continues to drag down auction activity.

Home values still rising

Over the week ending 22 August, prices across four major capital cities (Sydney, Melbourne, Brisbane, Adelaide) increased on a weekly and monthly basis.

Prices in these cities have risen by 0.3% weekly and 1.4% on monthly basis.

In terms of the total number of listings, only Melbourne reported an increase of 3.5%, indicating the slowdown in the city's housing market.

New listings in Melbourne also surged by 116.3%.