The auction clearance rate in Sydney nosedived at the weekend with just 49 per cent of properties selling, the poorest record in 18 months.

July's overall auction clearance rate is now at 58 per cent, far below April's 75 per cent and last month's 62 per cent.

While the National Australia Bank recently forecast house prices were potentially to keep growing about 5 per cent over the next year, estate agents say winter demand has not caught up with supply. July is usually the sluggish month for new listings.

The 2150 auction listings for July sustained the recent run of record volumes, surpassing the average 1130 listings for July for the past two decades. RP Data has approximated listings across Australia are at their highest record since December 2008.

According to RP Data research director Tim Lawless, The national capital-city auction clearance rate has mellowed to 56 per cent.

''The most surprising factor is that volumes remain so buoyant, despite the fact that clearance rates have been trending down for 11 weeks now,'' he said.
However, the increase in pre-auction sales, accounting for a quarter of those listed for the weekend, shows Sydney vendors know the market has lost its force.

Sydney's inner-west, which has been the auction powerhouse, has also slackened, with a 64 per cent month-to-date success rate, according to Australian Property Monitors.