Value growth slows

A fall in home values in Sydney and Melbourne has brought the national figure to its largest monthly fall since December 2022, property data analysts Cotality announced this week.

Cotality’s national Home Value Index (HVI) dropped 0.4 per cent in June, with a 1.2 per cent decline in Sydney home values serving as the most significant drag on the result. Melbourne followed closely with a 1 per cent decline, while ACT values fell 0.6 per cent.

Values in the other capitals lifted, but to a lesser degree. Adelaide values were unchanged over the month, while Brisbane and Perth saw modest rises of 0.3 per cent and 0.7 per cent, respectively.

The June update now indicates the national measure peaked in March, with values down 0.7 per cent through the June quarter.

According to Cotality research director Tim Lawless, the downward revision reflects a market that is changing rapidly.

“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”, Lawless said.

The June quarter marks a significant shift in Australia’s housing dynamic. Capital city home values have fallen by 1.3 per cent over the quarter, with Sydney leading the pace of decline at 3.2 per cent. Melbourne values were down 2.6 per cent through the quarter, and ACT values are 1.3 per cent lower.

“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 seventy-five 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.”

Outside the capital city trends, regional markets continue to outperform their capital city counterparts. Broadly, the combined regional index was up 0.3 per cent in June and was 1.1 per cent higher over the quarter, although the pace of gains is clearly slowing across regional Australia as well.