Australia's Housing Market Shows Signs of Slowdown
Australia's property market is showing signs of a slowdown, with national house prices experiencing a modest rise in October as more homeowners and investors capitalize on the spring selling season.
Data from CoreLogic reveals that the national median house price rose by 0.3% in October, reaching $809,849. This marks the 21st consecutive month of price increases, but the growth is uneven across capital cities.
Perth, Adelaide, Hobart, and Brisbane witnessed the strongest monthly price growth, offsetting declines in Darwin, Canberra, Melbourne, and Sydney. Despite remaining the most expensive market with a median price of $1.2 million, Sydney experienced a 0.1% price decline in October, its first since January 2023. This decline is attributed to a lack of affordable housing options.
The slowdown in price growth coincides with an increase in listings as owner-occupiers and investors seek to capitalize on higher prices during the spring selling season. CoreLogic's head of research, Eliza Owen, notes that most markets are experiencing slower growth, including mid-sized capitals like Adelaide, Brisbane, and Perth.
Owen attributes this slowdown to affordability constraints, with buyers shifting towards cheaper areas within these cities. The market is generally cooling, partly due to the strong spring selling season and increased listings. Listing volumes have risen by 13% since winter's end, while sales volumes have dropped by 7.5% in the past three months.
The data also reveals that the strongest conditions are in more affordable areas of capital cities, with unit values experiencing higher growth rates due to their lower price points. Brisbane real estate agent Vanessa Harte has witnessed this increased demand for units firsthand, with first-home buyers opting for units due to being priced out of the house market in many suburbs.
Expectations of future interest rate cuts have boosted buyer confidence and impacted seller attitudes. Harte notes that sellers are taking advantage of the strong market, particularly in the unit market.
While it remains a seller's market, Owen believes the scales are tipping towards buyers. This is evidenced by a lower auction clearance rate, longer days on market, and declining sales volumes.
With interest rate cuts not expected until 2025, the housing market's growth rate is likely to decline further, potentially putting downward pressure on prices. However, Owen emphasizes that affordability remains a challenge.
To create more affordable housing in the long term, deliberate investments are needed, driven by either government or the community housing sector.