Australia's property downturn deepened in August, with national home values falling 0.9 per cent, marking the fifth consecutive monthly decline, according to data from Cotality's monthly Home Value Index. The decline has now spread to 93 per cent of suburbs across the country's capital cities, up from 45 per cent in the autumn, as reported by the ABC.
Sydney led the declines among the capitals, with home values dropping 1.1 per cent in August. Melbourne and Canberra followed closely, each falling 0.9 per cent, while Brisbane, Adelaide, and Perth all recorded declines of 0.8 per cent. Transaction volumes were also sharply lower, with Brisbane, Perth, and Sydney seeing sales activity fall by more than 20 per cent year-on-year.
The national median property value is now about 7 per cent below its March peak, according to Cotality's data, as reported by both ABC and AMP.
Drivers of the downturn
Cotality's research director, Tim Lawless, attributed the decline to a combination of weak demand and elevated supply. Average open home attendances have fallen significantly, with Ray White chief economist Nerida Conisbee noting that typical open homes now attract about two people, down from about four a year ago. Conisbee said buyer activity is "particularly low," though she added that sellers are not showing signs of distress.
"We're not really seeing distress amongst sellers," Conisbee told the ABC.
Lawless pointed to interest rate hikes and policy changes as contributing headwinds, alongside higher-than-average stock levels. The national median property value now sits 7.1 per cent below its March peak, while Sydney values are 7.1 per cent below their own high.
Shane Oliver, chief economist at AMP, told The Australian that the slump is about 35 per cent through its cyclecarsand predicted prices would fall as much as 10 per cent from peak to trough before turning around in the second half of next year. He said the decline would weigh on economic growth but was unlikely to alter the Reserve Bank of Australia's interest rate trajectory, given the persistence of inflation.
Independent economist Alan Oster offered a more cautious outlook, saying the biggest risk to the market would be a sharper rise in unemployment. He told the ABC that if the jobless rate climbed to 5 to 6 per cent—higher than the Reserve Bank's forecasts—the property downturn could escalate, given Australian households carry some of the largest debt burdens in the world.
Ray White chief economist Nerida Conisbee said buyer activity had slowed markedly, with average open home attendances falling from about four people last year to about two this year. She noted that while demand was weak, sellers were not yet showing signs of distress.
Cotality's research director, Tim Lawless, attributed the deepening downturn to a combination of weak demand and above-average advertised stock levels. He noted that what began as a high-end correction had broadened to a much more widespread decline. The data also showed national home prices are now about 7 per cent below their peak recorded in March, with Sydney's values 7.1 per cent off their high.
The August figures follow a 1.2 per cent drop in July, according to Cotality. The ongoing decline has been attributed by analysts to persistently high interest rates, which have reduced borrowing capacity and cooled buyer demand across the country.