Australian home values fall for seventh straight month

Cotality's national Home Value Index fell 1.2% in October, marking a seventh straight monthly decline in Australian home values.

The national index is now 6.7% below its March peak, equivalent to about $63,400 off the value of the median Australian dwelling.

The downturn has spread beyond Sydney and Melbourne, with Brisbane and Perth now recording the steepest monthly falls among the largest capitals. Brisbane dwelling values fell 2.0% in October and Perth fell 1.7%, compared with a 1.6% decline in Sydney.

Across the combined capitals, home values have fallen 8.1% over seven months, a faster pace of decline than in any previous downturn in the past 40 years.

By comparison, the 2022-23 downturn produced a 7.0% fall across capital cities over the same period, while the 2017-19 downturn saw a 1.2% decline in its first seven months before becoming the largest peak-to-trough drop on record at 8.2%.

Research Director Tim Lawless said affordability pressures, borrowing constraints and weak consumer sentiment continued to weigh on demand.

"Affordability and serviceability constraints were the earliest factors weighing on housing demand, with these headwinds amplified by four interest rate hikes, persistently low confidence and ongoing cost-of-living pressures. The Federal Budget has added to the downside pressure since mid-May," Lawless said.

The shift has been especially notable in markets that posted strong gains in recent years. Brisbane values are down 6.1% over the rolling quarter, while Perth is down 5.7% and Sydney 4.7%.

"The mid-sized capitals, where home values recorded extreme growth conditions over the past six years, are now well and truly in a correction," Lawless said. "Virtually every suburb across Brisbane, Perth and Adelaide has recorded a drop in values over the past three months."

The previous upswing still leaves many owners in Brisbane, Perth and Adelaide with a substantial equity buffer despite recent losses. A 20% fall from Perth's recent peak would still only take that market back to levels seen around mid-2025.

Conditions appear weaker in the larger eastern markets. Melbourne home values are 7.3% lower than five years ago, while Sydney values sit 1.5% below their level in October 2021. Canberra values are broadly unchanged over the same period.

Sales slow

Demand has also weakened sharply in transaction volumes. Modelled estimates put home sales over the past three months 23% lower than a year earlier and 18% below the previous five-year average.

Sydney and Brisbane recorded the largest annual drops in sales activity, down 30% and 29% respectively. That has flowed through to softer selling conditions, with auction clearance rates across the combined capitals remaining below 50%.

Private treaty sales are also taking longer to complete. The median time on market has reached 39 days, the highest level since August 2020, while vendor discounting has widened to 4.7%, its highest reading since May 2019.

Stock for sale has risen even as fewer owners list properties. Fresh listings are running almost 18% below average, but slower absorption has lifted capital city listings to their highest level for this time of year since 2019.

"Buyers have a lot more stock to choose from, they have more leverage and there isn't the same urgency to buy as there was a year ago when home values were rising rapidly," Lawless said. "But despite this being a buyer's market, they are noticeably absent, reflecting low confidence and ongoing serviceability barriers."

City results

Among the capitals, Melbourne recorded a 0.8% monthly fall, Adelaide fell 1.2% and Canberra declined 0.7%. Hobart and Darwin were the only capitals to post monthly gains, rising 0.5% and 0.6% respectively.

Over 12 months, Sydney values were down 9.4% and Melbourne fell 7.6%. Brisbane still recorded annual growth of 0.4%, while Adelaide rose 3.7%, Perth 3.9%, Hobart 5.5% and Darwin 9.7%.

The median dwelling value across Australia stood at $884,855 in October. Sydney remained the most expensive capital at $1,178,959, followed by Brisbane at $1,018,401, while Darwin had the lowest median value at $641,873.

Value tiers have also become more closely aligned. Lower-quartile properties led the previous upswing, but recent movements have become more uniform, particularly across the mid-sized capitals, where differences in growth rates between value bands have narrowed.

The combined capitals index fell 1.4% in October, while combined regional markets declined 0.7%. Annual values in regional Australia remained 3.4% higher, compared with a 4.8% annual fall across the capitals.