Key facts
- National home prices fell 0.4% in June, the largest monthly drop since December 2022.
- Sydney and Melbourne recorded the steepest declines, down 1.2% and 1% respectively.
- National prices are down 0.7% in the second quarter, suggesting a peak in March.
- Mortgage demand decreased by 6.6% in the five months to May compared to the previous year.
- Auction clearance rates in capital cities dropped to 47.4% last week, the lowest since April 2020.
Australian home prices experienced their steepest monthly decline in three-and-a-half years in June, falling 0.4% as a record housing boom succumbed to higher borrowing costs and tax clampdowns on investment properties. National prices are now down 0.7% for the second quarter, with Sydney and Melbourne leading the monthly drop.
Figures from Cotality showed the national monthly decline was the largest since December 2022, though prices were still up 7.3% year-to-date. Sydney and Melbourne saw declines of 1.2% and 1% respectively, while mid-sized capitals like Adelaide, Brisbane, and Perth showed slower growth or flatlining.
This slowdown follows a more than 30% surge in national property prices over the past five years. Tim Lawless, research director at Cotality, noted that affordability hurdles, high cost-of-living pressures, pessimistic sentiment, and property taxation changes announced in the federal budget are contributing to weaker housing conditions.
The Reserve Bank of Australia acknowledged the housing market had eased and expected housing credit growth to slow, but also noted the risks of a material weakening that could inhibit consumption. Data from Equifax indicated a 6.6% drop in mortgage demand in the five months to May compared to a year earlier, with first-time buyer inquiries falling 9.1%.
Auction clearance rates in capital cities fell to 47.4% last week, the lowest since April 2020, and capital city home sales in the June quarter were down 16.2% year-on-year. A sustained fall in housing turnover could have broad economic implications due to the sector's links to real estate services and construction. Separate data from PropTrack showed home prices fell for a third consecutive month in June, though they remain 5.8% higher than a year ago.