Yeah, that's the point. Freelancing rates and salaries take a dive during low demand. An auction is focused on getting a high price for something which is in high demand. If there is not a high demand, you wouldn't have a need for an auction model (when talking services / hours, not physical products).

Unlike a physical product, every developer / designer will have a minimum price which they won't go below. Thus the auction will never favor the buyers. In a low market, buyer will pay only minimum price, hence the auction format loses its purpose, as there will be no bids.