Australia is currently witnessing a nationwide slump in its housing market, driven by rising interest rates and revisions to property tax regulations.
Recent data from property analytics firm Cotality reveals that home prices across the nation decreased by 0.7 percent last month, marking the steepest monthly drop since December 2022.
Yearly growth has tumbled to a modest 5.3 percent, a significant downgrade from the rapid double-digit increases seen earlier in the year.
Sydney and Melbourne, Australia’s largest property hubs, endured declines of 1.4 percent and 1.2 percent, respectively, placing them over five percent below their most recent high points.
Prices in Brisbane and Adelaide, where the market had been soaring, also took a hit, falling by 0.6 percent in Brisbane and 0.2 percent in Adelaide.
In Perth, which has recorded the strongest year-on-year growth of any capital city at 21.8 per cent, prices were virtually flat, rising just 0.1 per cent.
“For buyers who remain in the market, lower competition and elevated stock levels (when compared with the start of the year) mean greater choice and more negotiating power,” the property analytics firm said.
However, the fall in prices has been led by properties at the higher end of the market, providing little benefit to first home-buyers who are also grappling with lower borrowing capacity after three interest rate hikes this year.
Homes in the top quarter of the market lost 3.2 per cent of their value in the three months to July, compared to a 0.3 per cent gain in the lower-price tier.
Beyond the capital cities, the regional property market recorded a drop a 0.2 per cent — the first decline since January 2023.
“There remains a mismatch between the pricing expectations of buyers and sellers,” Cotality head of research Gerard Burg said.
Consumer sentiment has also been soured by high living costs, uncertainty caused by the ongoing Middle East war and tax changes announced in the May budget.
“We have observed a deterioration in the flow of new listings across the country in recent weeks, led by Sydney, as potential vendors assess a weak market and choose to wait until conditions improve,” Burg said.
Rental prices have continued to rise due to low vacancy rates. Burg said national median rents had risen by more than $200 a week in the last five years.
“Despite the tight market conditions, there are question marks about how much further rents can rise,” he said.
— With additional reporting by Australian Associated Press