Melbourne's auction market seemed to falter yesterday in the face of its first big test of the spring selling season.

The auction clearance rate fell to 53 per cent for the 599 auction results reported to the Real Estate Institute of Victoria. But this figure is likely to drop as the industry group tracks down the results of another 99 auctions still unreported.

Buyer confidence, which was already flagging after months of instability in the global economy and financial markets, seems to be worsening.

''You need to look no further than what was dominating the media on Friday to see why there is a general lack of confidence affecting the market,'' said REIV spokesman Robert Larocca. ''The impact of what is going on overseas makes it a pretty confusing time for anyone buying a home at the moment.''

Adding to the mounting sense of gloom are the latest figures from analysts Residex showing that property prices are continuing to fall - and the losses are now really starting to mount up.

Melbourne's median house value dropped 0.74 per cent in August. Units were down 1.04 per cent.

After three months of steady decline, about $18,500 (or 3.1 per cent) has been wiped off the city's median house value. Units have fared comparatively better, with a loss amounting to $7000 (1.5 per cent) over that time.

Yesterday, most of the interest and heat from buyers seemed to be targeted at the more affordable end of the market.

In Caulfield North, a three-way competition between investors and first home buyers developed over 2/401 Alma Road, a ground-floor, one-bedroom apartment that sold for $31,000 above expectations. Hocking Stuart Caulfield said the property was declared on the market at $330,000 but the hammer fell at $361,000. It had been quoted at $310,000-$340,000.

A couple of first home buyers made a play for the three-bedroom townhouse at 30 Jamieson Avenue in Footscray, which was declared on the market at $480,000 and sold for $2000 more. Barry Plant Yarraville quoted it at $450,000 to $490,000.

Two first home buyers were also responsible for pushing 4/79 Flinders Street in Thornbury to a sale under the hammer.

Advantage Property Consulting said the two-bedroom villa unit was declared on the market at $430,000 and sold for $445,500. Nelson Alexander quoted it at $400,000-$440,000.

Strong results were also posted for a few properties in the $1 million range that were particularly well located.

The modern, three-bedroom townhouse at 8 Birch Square in Richmond sold for $1,095,000 off a reserve of $990,000. Biggin & Scott Richmond, who quoted the property at $900,000-$990,000, said three bidders were responsible for pushing the price $105,000 above expectations.

The vendors of 58 Perth Street in Prahran managed to do even better, with bidding on the free-standing Victorian rising another $120,000 after it was declared on the market at $1.08 million. Kay & Burton had reportedly quoted it at $1 million to $1.1 million. It sold for $1.2 million thanks to four bidders.

At the upper end, the four-bedroom modern home at 2 Rosedale Road in Glen Iris received more than 40 bids from two bidders and sold for $2.12 million off a reserve of $1.9 million. Jellis Craig Glen Iris had quoted it at $2 million to $2.2 million.

The auction of 10 Evandale Road in Malvern fizzled out when the auctioneer bumped the price with a strong vendor bid. A genuine bid took the double-fronted Victorian to $1,025,000, but they weren't willing to top the $1.04 million vendor bid that followed, according to JPP Buyer Advocates. Bennison Mackinnon, who quoted it at $1 million to $1.1 million, said a later offer of $1,041,000 was received.

There are only 50 auctions scheduled for the weekend of the grand final.