Preliminary data released by property consultant firm CoreLogic showed an average clearance rate of 71.21pc for the 1,115 properties listed for auction in state capital cities during the last week of July.
Those numbers are slightly up from last week's figures and well above a clearance rate closer to 50pc from 12 months ago.
Clearance rates show the percentage of properties sold at auction and are an indicator of the health of the property market.
Melbourne, Australia's second most populous city, recorded the largest number of properties listed for auction, with 546 of them recording a clearance rate of 74.02pc.
In the biggest city of Sydney, preliminary clearance rates reached 78.48pc for the 391 properties auctioned.
Estate agent Charles Bailey told Reuters five bidders battled it out on Saturday over a house in the Sydney's trendy inner west that went under the hammer for A$1.605 million ($1.11 million).
"In the inner west, I think the market has definitely bottomed and I do sense there is a confidence coming back from buyers," Bailey told Reuters on Sunday.
"But obviously, I think the biggest concern now is our stock levels are still very low."
Angie Zigomanis, head of BIS Oxford Economics' Australian Residential Research Unit, told Reuters that while the improved clearance rates were a positive sign for the property market, the relatively low number of total auctions should be noted.
"At the end of the day, we're still talking about lower activity that's taking place overall so that doesn't necessarily mean there's a huge number of extra buyers out there in the market," Zigomanis told Reuters.
"Nevertheless, it's obviously better than the mid-50s that was going on a few months back," she said, referring to the clearance rate.
Data released by CoreLogic this time last year showed 1,536 homes were taken to auction nationally with a clearance rate of 55.6pc.
The Reserve Bank of Australia (RBA) has been closely watching housing market weakness as two years of price declines have eroded wealth, undermining consumer confidence and spending power.
The central bank has reduced interest rates twice since June to an all-time low of 1pc to revive growth and inflation, with a third interest rate cut expected by Christmas.