Key facts
- National home prices fell 0.7% in July, the largest monthly drop since December 2022.
- Prices have declined across most of Australia since May, with Brisbane, Adelaide, and Perth experiencing drops.
- Sydney and Melbourne led the monthly decline with price drops of 1.4% and 1.2% respectively.
- Higher borrowing costs and proposed tax changes for property investors are impacting buyer confidence.
- Reserve Bank of Australia Governor Michele Bullock noted the slump in demand and expects prices to settle.
- Auction clearance rates improved slightly to 53.6%.
Australian home prices experienced a significant downturn in July, marking the second consecutive month of steep declines. National home prices fell by 0.7% from June, the largest monthly drop since December 2022, according to data from property consultant Cotality. Annual growth has decelerated sharply to 5.3%, a notable slowdown from earlier in the year.
Sydney and Melbourne were the primary drivers of the decline, with prices falling 1.4% and 1.2% respectively, pushing both cities more than 5% below their recent peaks. The slowdown has extended to other markets, with Brisbane, Adelaide, and Perth also experiencing price drops. Regional home values fell or stayed flat in every state in July.
The weakening housing market has been a recurring topic for Reserve Bank of Australia Governor Michele Bullock, who expressed surprise at the slump in house prices and housing demand since May. She attributed the slump to falling buyer demand and expects things to settle down as people adjust to new rules. Proposed changes to tax benefits for property investors are likely affecting buyer confidence, while higher borrowing costs also contribute to the slowdown.
Buyers and sellers are showing signs of adjustment, with auction clearance rates edging up from their June low. However, the number of new listings declined in July as sellers held off going to market to wait out weak conditions. NAB reported a 15% fall in home loan applications in the three months to June compared to the previous quarter.