Home value declines spread across Australia's housing market through winter, new figures show.
Cotality's national Home Value Index fell 0.9 per cent in August, marking a fifth consecutive month of decline and taking national home values 3.6 per cent below the market peak recorded in March.
Tim Lawless, Cotality’s Research Director, suggests the latest figures show the downturn is no longer confined to select markets or higher-value segments.
“What started as a more concentrated easing across higher-value segments has now become a much more generalised softening, with the vast majority of capital city suburbs recording some level of decline”, Lawless said.
The proportion of capital city suburbs recording a fall in home values more than doubled through winter, rising from 45.8 per cent in autumn to 93 per cent, highlighting a much broader weakening in housing conditions.
Sydney is leading the pace of decline, with home values there down 1.4 per cent in August to be 7.1 per cent below peak levels recorded in February. The rate of decline in Sydney is now outpacing the earlier 2022-23 correction, when values were down 6.6 per cent over the equivalent period following the market peak.
“Sydney continues to lead the downturn”, Lawless commented. “The combination of a sharp drop in demand and higher than average advertised stock levels is weighing more heavily on Australia’s largest housing market.”
Melbourne, Canberra (both down 1.1 per cent) and Brisbane (down 1.0 per cent) are the only other capitals to record a decline of one per cent or more in home values over the month. Still, the other mid-sized capitals aren't far behind, with Adelaide and Perth home values dropping 0.8 per cent in August.
Most capitals are seeing the more expensive end of the market record weaker conditions than lower-priced housing; however, the gap has narrowed as the downturn has become more broad-based. Higher-value housing continues to record larger declines amid elevated borrowing costs and serviceability constraints, while lower quartile values are now also falling as affordability pressures and weaker demand become more widespread.
“The narrowing performance gap between the upper and lower quartiles is another sign this downturn is broadening”, Lawless said. “Premium markets are still generally recording weaker conditions, but lower-priced housing is becoming less insulated as affordability pressures and softer demand weigh more evenly across the market.”
The combined regional index was down 0.4 per cent in August, taking regional values 1.2 per cent lower through winter. Regional South Australia was the only broad rest-of-state market to avoid a decline in values over the past three months, highlighting a deteriorating trend across regional Australia.
“The softer trend in values is underpinned by weaker transaction activity”, Lawless noted. “Sales volumes are tracking well below both year-ago levels and the five-year average, which points to a clear reduction in buyer demand.”
As demand has weakened, homes are taking longer to sell and listings have accumulated. Across most capital cities, advertised supply is now tracking above both year-ago and five-year average levels. Over the four weeks ending August 30, capital city listings were 24 per cent higher than a year ago and 8 per cent above the five-year average.
This rise in listings comes despite fewer new entries, with the flow of freshly advertised homes added to the market tracking 6 per cent lower than a year ago and 8 per cent below the five-year average.
“Higher advertised stock levels are simply a factor of a slower rate of absorption”, Lawless said.
“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.”