Australia's housing downturn broadened through winter, with home values falling across 93% of capital city suburbs as weaker demand, elevated listings and affordability pressures weighed on the market.
Cotality's national Home Value Index fell 0.9% in August, marking a fifth consecutive monthly decline and leaving national home values 3.6% below the market peak recorded in March.
The proportion of capital city suburbs recording a decline in home values more than doubled through winter, rising from 45.8% in autumn to 93%.
Every capital city except Darwin recorded a decline over the past three months.
Cotality Research Director Tim Lawless said the latest figures showed the downturn had spread beyond higher-value segments and selected markets.
“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.”
Sydney recorded the sharpest monthly decline among the capitals, with values falling 1.4% in August to sit 7.1% below their February peak.
The decline is now outpacing the city's 2022-23 correction, when values fell 6.6% over the equivalent period following the previous market peak.
“Sydney continues to lead the downturn,” Lawless said. “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 and Canberra both recorded a 1.1% decline in August, while Brisbane fell 1.0%. Adelaide and Perth also weakened, with values down 0.8% over the month.
The more expensive end of the market continues to record larger declines across most capitals, although the gap with lower-priced housing has narrowed as weakness becomes more widespread.
Higher-value properties remain under pressure from elevated borrowing costs and serviceability constraints, while affordability pressures are increasingly affecting lower-priced housing.
“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.”
Regional housing markets also weakened, with the combined regional index falling 0.4% in August and 1.2% over winter.
Regional South Australia was the only broad rest-of-state market to avoid a decline over the past three months.
Weaker demand has been a key driver of the downturn, with Cotality's quarterly estimate of home sales tracking 15.5% below the same period last year and 11.5% below the five-year average.
Brisbane, Perth and Sydney recorded the largest falls in transaction activity, with estimated sales volumes more than 20% lower than a year ago.
“The softer trend in values is underpinned by weaker transaction activity,” Lawless said. “Sales volumes are tracking well below both year-ago levels and the five-year average, which points to a clear reduction in buyer demand.”
At the same time, properties are taking longer to sell and advertised stock is accumulating. Capital city listings were 24% higher than a year earlier and 8% above the five-year average in the four weeks to August 30.
The increase in total listings has occurred despite a decline in fresh supply, with new listings running 6% below year-ago levels and 8% 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.”
