Half the lots offered at Sotheby’s auction of Australian paintings were unsold as the nation’s stock market slide quelled demand for art, the company said.

Sotheby’s sold 114 of 228 items offered in Melbourne over two days, tallying $5.8 million. Last year, the New York-based company sold 65% of lots, according to Sotheby’s data. This year’s priciest item was Russell Drysdale’s 1962/63 oil portrait of farmer “Rocky McCormack,” which fetched an artist auction record of $1.61 million.

“What’s happening in the stock market and property market are being reflected in the art market,” said Georgina Pemberton, head of Australian Paintings at Sotheby’s.

Australia’s benchmark S&P/ASX 200 Index has fallen 21% this year, while the nation’s housing affordability index is near a 24-year low.

Ms. Pemberton said Sotheby’s sale results show “the art market is becoming more realistic and less speculative.”

Most of the auction’s top works were sold on Monday when Charles Conder’s 1888 “The Fatal Colors” fetched $599,362 and Brett Whiteley’s 1974 “Glimpse of Eden” sold for $389,478. The top lot at yesterday’s day sale was British painter Edward Seago’s oil-on-board “November Morning, Pin Mill,” which fetched $66,621, compared with its presale top estimate of $48,446.

Ms. Pemberton said Sotheby’s may feature more contemporary Australian paintings by artists such as Del Kathryn Barton, whose “confronting” works are earning her a following.

Ms. Barton’s 2004 “Punk, Spunk and Green Rain for the Heart,” a watercolor, gouache, ink on paper showing a corseted, white-haired woman with blue eye shadow, fetched $61,513, compared with a presale top estimate of $51,260.