Cotality’s national Home Value Index fell 1.2% in October, extending the downturn to a seventh consecutive month, and leaving values 6.7% below their March peak.
This is equivalent to a decline of approximately $63,400 in the value of the median Australian dwelling.
The combined capitals index is down 8.1% in seven months, the fastest pace of decline in forty years, with Brisbane values falling 2.0% and Perth 1.7% in October, faster than Sydney’s 1.6%.
Cotality’s research director, Tim Lawless, said an array of headwinds continued to weigh on housing demand, even amid a shortage of new homes being built.
“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," Lawless said.
"The Federal Budget has added to the downside pressure since mid-May.”
The 2022-23 downturn had seen capital city values drop 7.0%, and the earlier 2017-19 downturn, which was the largest peak to trough decline on record at -8.2%, had recorded a 1.2% fall.
Brisbane and Perth have overtaken Sydney with the fastest pace of decline, with dwelling values down 2.0% and 1.7% respectively in October, taking values 6.1% and 5.7% lower over the rolling quarter.
Sydney is a close third, with values down 1.6% over the month and 4.7% over the quarter.
“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.”
Given the magnitude of the upswing prior to the downturn, most homeowners in these cities are likely to be sitting on a significant equity buffer.
For example, a 20% drop in Perth home values from their record high would only take the market back to levels recorded in around mid-2025.
Homeowners in Melbourne and Sydney aren’t in as strong an equity position, with Melbourne home values 7.3% lower than five years ago and Sydney values 1.5% below October 2021 levels.
ACT values are virtually unchanged from five years ago.
Drilling down to the broad value tiers, the market dynamic has become more uniform over recent months.
Through the previous upswing, lower-quartile properties were leading the growth trend by some margin.
More recently, these trends have converged, especially across the mid-sized capitals, where there is now very little difference in growth rates across the broad value tiers.
Modelled estimates put the number of home sales over the past three months 23% lower than a year ago and 18% below the previous five-year average.
The decline in sales activity has been most significant across Sydney and Brisbane, down 30% and 29% respectively compared with a year ago.
Auction clearance rates across the combined capitals are consistently tracking below 50%, while private treaty metrics have also weakened.
The median time on market, at 39 days, is the highest since August 2020, while vendor discounting, at 4.7%, is the largest since May 2019.
The slower rate of absorption has seen capital city listings rise, reaching the highest level for this time of year since 2019.
The rise in advertised stock levels comes despite the flow of fresh listings tracking almost 18% below average.
“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.”
