Key facts
- Australian national home prices fell 0.9% in August, extending a five-month decline.
- Sydney and Melbourne saw the largest monthly price drops.
- Previously strong markets like Brisbane and Perth also experienced price decreases.
- Transaction activity is down 15.5% year-on-year, indicating a buyer's market with low confidence.
- Government tax changes and anticipated interest rate hikes are expected to further pressure the housing sector.
Australian home prices continued their decline in August, falling 0.9% from July, marking the fifth consecutive month of decreases. The downturn has broadened across the country, with major cities like Sydney and Melbourne leading the falls, and previously strong markets such as Brisbane and Perth also experiencing price drops. National home values are now 3.6% below their peak, though still 2.7% higher year-on-year.
Property consultant Cotality reported that Sydney prices have fallen 7.1% from their February peak, a faster rate than the previous correction in 2022-23. Research director Tim Lawless attributed the softer trend to weaker transaction activity, with sales down 15.5% year-on-year, indicating a buyer's market where confidence is lacking.
The housing sector's slump has wide economic implications, affecting industries from construction to real estate services, and housing credit growth has already begun to slow. Little relief is expected as government tax changes have reduced investor demand, and the Reserve Bank of Australia has raised its cash rate three times this year to 4.35%. Markets anticipate further rate hikes following a recent hot inflation print.