The housing downturn spreads as spring selling season begins
Cotality's national Home Value Index fell 0.9 per cent in August, its fifth consecutive month of decline. The weakness has broadened considerably: 93 per cent of capital city suburbs recorded a fall in dwelling values over winter, up from 45.8 per cent in autumn.
Sydney continues to lead the downturn, down 1.4 per cent in August and now 7.1 per cent below its February peak, a steeper fall than the 2022–23 correction at the same stage. Melbourne and Canberra each fell 1.1 per cent, Brisbane 1.0 per cent, and Adelaide and Perth 0.8 per cent. Darwin was the only capital to record a rise, up 0.6 per cent.
Tim Lawless, Cotality's Research Director, said the easing that began in higher-value segments has now become "a much more generalised softening" across the market.
Weaker demand sits behind the broader falls. Cotality's quarterly estimate of home sales is tracking around 15 per cent below year-ago levels, and advertised listings across the capitals were 24 per cent higher than a year earlier over the four weeks to 30 August, as homes take longer to sell.
RBA holds, but flags more pain ahead
The Reserve Bank left the cash rate on hold at 4.35 per cent in August, providing some short-term relief after three hikes earlier in the year. Governor Michele Bullock nonetheless warned that home prices are likely to keep falling, noting inflation remains above target and that the Bank stands ready to lift rates again if needed. The next decision is due on 29 September.
For SME developers, persistently high borrowing costs keep financing headroom important while softer buyer demand weighs on achievable end values.
No spring bounce at auction
Auction clearance rates have failed to lift with the start of the spring selling season. The finalised combined capitals clearance rate came in at 49.3 per cent for the week ending 6 September, 20.7 percentage points below the same week last year and the 14th week in the past 15 to sit under 50 per cent. Melbourne (54.6 per cent) and Sydney (52.5 per cent) held up best; Brisbane's auction market has been hit hardest, clearing just 26.0 per cent.
Construction pipeline falls further behind target
Homebuilding completions are running an estimated 27 per cent below the pace needed to meet the federal government's 1.2 million new homes target. New dwelling commencements fell 11.2 per cent in the March quarter compared with the previous quarter, with apartment starts down 20.7 per cent, and Urbis data suggests almost 70 per cent of apartments approved since 2020 have yet to reach construction.
Against that backdrop, ABS building approvals data offered a rare bright spot, with total dwellings approved up 7.2 per cent in June in seasonally adjusted terms, though approvals and completions can diverge sharply once financing and construction costs are factored in.
New home loans at their quietest since 2023
APRA data show new home loan growth slowed to just 0.2 per cent in July, the quietest month for home lending since July 2023, when the RBA's steepest hiking cycle came to an end. Banks have passed on this year's cash rate rises quickly, pushing scheduled mortgage repayments back towards their 2024 peak relative to household income.
Approaching the bottom?
Rob Flux, educator and mentor at The Property Developer Network, believes the market could be close to a floor, pointing to a possible turnaround within nine to twelve months and describing current conditions as offering buying opportunities ahead of an eventual recovery.
David Ingram, CEO of CrowdProperty Australia, said SME developers are operating in a more challenging environment, with falling values, higher borrowing costs and tighter credit all weighing on project feasibility. He added that Australia's underlying housing shortage means well-located, well-structured projects remain essential, and that supporting capable SME developers to bring more homes to market will be critical to improving supply and affordability.
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