Sydney and Melbourne continue to lead slowdown as buyer demand weakens across the capitals
Australian home values fell 0.4% in June, the steepest monthly decline recorded since December 2022, according to Cotality's national Home Value Index.
Sydney recorded the largest contribution to the national fall, with values down 1.2% over the month. Melbourne values dropped 1%, while the ACT recorded a 0.6% decline.
Growth across the mid-sized capitals also slowed sharply. Adelaide values were flat in June, while Brisbane and Perth posted monthly gains of 0.3% and 0.7% respectively, well below the average monthly increases of 1.9% and 2.5% these cities recorded over the March quarter.
The market slowdown has prompted downward revisions to recent index readings. Cotality's June update now places the national peak in March, with values falling 0.7% across the June quarter as a whole.
Source: Cotality
“The downward revision reflects a market that is changing rapidly,” said Tim Lawless (pictured right), research director at Cotality. “Most regions have seen values revise lower over recent months, with the largest downgrades occurring in Perth and Brisbane, where the May index has been revised 88 and 53 basis points lower with the June update.”
Quarterly figures point to a marked shift in market conditions. Capital city values fell 1.3% over the June quarter, with Sydney recording the steepest drop at 3.2%. Melbourne values declined 2.6% over the same period, while ACT values were down 1.3%.
“Weaker conditions through the second quarter of the year are attributable to an array of downside factors,” Lawless said. “Even before interest rates rose by 75 basis points, we were seeing affordability hurdles weighing on buyer demand. Higher cost-of-living pressures, deeply pessimistic sentiment and a further dampening of demand via property taxation changes announced in the federal Budget are all contributing to weaker housing conditions.”
Additional indicators point to softer conditions beyond the headline value figures. Combined capital city auction clearance rates have remained below 50% since late May, slipping into the low-40% range from late June.
Capital city sales volumes over the three months to June are estimated to be 16.2% below the same period last year and 14.5% under the five-year average for the season.
Meanwhile, advertised stock across the capitals is broadly in line with the five-year average, down 0.1%, but sits almost 11% higher than twelve months ago.
“Such low clearance rates indicate a mismatch between buyer and seller pricing expectations,” Lawless said. “Buyers now have more stock to choose from and less urgency in their decision-making.
“Higher listings aren't due to a pick-up in the flow of new listings; it's a symptom of less demand in the market, which has led to an accumulation of advertised stock.”
Regional markets continued to outpace their capital city counterparts, though growth has eased there too. The combined regional index rose 0.3% in June and 1.1% over the quarter.
Regional Victoria posted the weakest performance among the regions, down 0.1% in June, while regional New South Wales values held flat over the month. Regional Western Australia remained the standout performer, with values up 3.7% over the June quarter.
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