“Weekly clearance rates have consistently dropped in recent months to be under 60 per cent, compared with peak levels of almost 80 per cent,” said Mr Bassanese.

“Clearance rates are reaching levels at which Sydney house prices will likely stop rising before long.”

Growing land shortages, rising rental vacancy rates and flatter property prices will further undermine developer incentives to boost supply, he said.

The rate of building approvals is another factor suggesting weakness in the property market.

“The real value of quarterly building approvals is already at a relatively high level and more timely monthly approvals suggest a peak has already been reached,” Mr Bassanese said.

“[This] suggests that [a] lag before a topping out in approvals feeding through into a downturn in housing construction is not especially long – at most one or two quarters.”

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