Australian Housing Prices Fall for Seven Consecutive Months, Recording Largest Decline in 40 Years

National Median Housing Price Falls by $63,400

Cotality's latest national Home Value Index (HVI) fell 1.2 percent during October alone. The total decline from the March peak is 6.7 percent, representing a decrease of approximately $63,400 based on Australia's median housing price. The index shows the current national median housing price at $884,855.

Cotality Research Director Gerard Burg stated that capital city prices fell 8.1 percent over seven months, the fastest pace of any downturn in the past 40 years. Almost all areas of Brisbane, Perth, and Adelaide recorded price declines over the recent three months, with buyers finding it difficult to obtain loans due to high interest rates cited as the cause.

Demand Reduction Leading the Decline

Burg explained that this decline was driven by reduced demand. Interest rate increases reduced household borrowing capacity and increased mortgage repayments, causing many buyers to withdraw from the market.

He anticipated that interest rates would remain high for longer and housing prices would fall further. The previous decline record from 2017 to 2019 was a combined 8.2 percent for capital cities, and with the current decline reaching 8.1 percent as of October, he projected it would soon surpass the previous record.

Domain Chief Economist Nicola Powell said median housing prices have already decreased by approximately 6 percent and a 10 percent decline is realistic. She anticipated that discussions of interest rate cuts would not begin before late 2027.

Regional Differences and Sales Decline

Burg explained that Brisbane, Adelaide, and Perth have greater room for decline because they experienced sharp increases over the past five years. In contrast, he assessed that Melbourne has relatively less room for decline.

Cotality calculated that housing sales transactions over the recent three months decreased 23 percent year-on-year and 18 percent compared to the five-year average. Combined capital city auction clearance rates have consistently recorded below 50 percent, and the median time properties remain on the market is 39 days, the longest since August 2020.

Sam Devlin from Harcourts, who brokers real estate in Brisbane, reported that open house inquiries have significantly decreased over the past six months. He said government tax policy on negative gearing and capital gains tax after the May budget affected investor demand.

Jin Ling from Vic Prop, who brokers in Melbourne's eastern suburbs, explained that buyers are hesitating to purchase while worried about interest rates rising two or three more times over the next 12 months. He projected it could take three to four years for prices to recover.

Source: ABC News