Australian residential property prices fell for the fifth month running in August, as the downturn broadened from primary metropolitan centres to other cities and regional areas, according to data released on Tuesday.
Property consultant Cotality reported that national home values were down 0.9% in August from July, which itself was revised lower to a 1.2% decline. Those moves leave the national index 3.6% below its peak while still 2.7% higher than a year earlier.
Sydney and Melbourne again recorded the largest monthly falls, slipping 1.4% and 1.1% respectively. Nearly every state capital posted declines, and markets that had surged earlier in the year cooled noticeably. Brisbane and Perth each reversed course in August, falling 1.0% and 0.8% after experiencing double-digit gains earlier in the year.
Cotality highlighted the scale of Sydney’s correction, noting that prices there are down 7.1% from their February peak. That rate of decline now exceeds the earlier 2022-23 correction when the central bank lifted interest rates by 425 basis points and values fell 6.6%.
"The softer trend in values is underpinned by weaker transaction activity," said Tim Lawless, Cotality’s research director, noting that sales in the past three months were down 15.5% compared with a year earlier. "Longer selling times, larger vendor discounting and persistently low auction clearance rates all point to a buyer’s market, yet buyers are lacking the confidence to transact at the moment."
The report underscored how a sustained reduction in housing turnover could ripple across the economy because the housing sector is interconnected with a range of industries - from real estate services to tradespeople and construction. Signs of cooling are already visible in credit flows: housing credit growth has started to slow.
Other structural and policy influences are also weighing on conditions. Recent government tax changes have damped investor demand, removing a source of support for activity in the rental and investment segments of the market. Meanwhile, ongoing monetary tightening remains a factor; the Reserve Bank of Australia has increased the cash rate three times this year to 4.35%.
Markets are pricing in the likelihood of another rate rise later in the year after a stronger-than-expected inflation print for July, a prospect that would further raise borrowing costs for mortgage holders and potential buyers. Taken together, cooling transactions, fiscal changes that have reduced investor appetite and a higher-for-longer interest-rate backdrop point to tougher housing market conditions ahead.
For market participants and sectors linked to housing, the evolving dynamics warrant close monitoring. Real estate services, construction trades and credit providers are among the areas likely to feel the near-term impact if the observed slowdown in turnover persists.