Australia’s largest housing markets in Sydney and Melbourne have experienced declines in property values for the first time since the COVID-19 pandemic, marking a shift amid broader national growth.
Recent Market Declines
Data from CoreLogic reveals that property values in both cities have fallen since February. As of the latest rolling daily index on Sunday, these markets show a 0.04 percent downturn.
Despite this cooling, the national housing market continues to expand, driven by robust gains in smaller capital cities like Brisbane, Perth, and Adelaide. Combined capital city growth stands at 0.3 percent, while regional areas report even stronger increases of 0.9 percent.
Expert Analysis on the Downturn
CoreLogic research director Tim Lawless notes that Sydney and Melbourne are clearly entering a downturn. “We’ve seen more than three months of housing values moving backwards, even though clearance rates haven’t been at this lower level for all of that time,” he stated.
Lawless highlights historical patterns, pointing out that clearance rates this low have aligned with downturns only about five times in the past 15 years, including early 2020 pandemic effects, credit tightening in 2018-2019, and interest rate hikes in 2011.
Rising interest rates since 2022 and surging fuel prices are likely prompting buyers to hold back, according to Lawless.
Temporary Slowdown or Deeper Trend?
Ray White chief economist Nerida Conisbee views the slowdown as temporary. “While conditions have softened slightly, they remain well-supported by underlying demand. As a result, they are unlikely to move into negative growth in the near term unless there is a more material deterioration in economic conditions,” she said.
Auction Performance Insights
Preliminary clearance rates this week hit 58.9 percent, the third straight week below 60 percent. Across capital cities, 19 percent of auctions were withdrawn, rising to 26.7 percent in Sydney.
One standout Sydney auction saw a three-bedroom apartment in Botany sell for $1.665 million, $65,000 above reserve, in what agent Brigitte Blackman of BresicWhitney called a “fast auction.” However, she added that some properties receive no bids at all.
Auction volumes are set to drop next week due to the Anzac Day public holiday.
