Australia’s house price correction has steepened in July, with Cotality’s daily dwelling values index declining by 0.7% over the past 28 days across the five major capital city markets:
As illustrated in the chart above, the decline at the 5-city aggregate level is being driven by Sydney and Melbourne (both -1.2%), although Brisbane and Adelaide (both -0.2%) have also recorded value falls over the past 28 days.
Cotality also shows that regional dwelling value growth has slowed sharply, but at 0.1% over the past 28 days, it remains in positive territory.
Source: Cotality
The latest Westpac-Melbourne Institute monthly consumer sentiment survey, released on Tuesday, shows that house price expectations continue to plummet following this year’s three interest rate hikes from the Reserve Bank and the federal government’s changes to negative gearing and capital gains tax:
Chart by Shane Oliver (AMP)
The Westpac–Melbourne Institute Index of House Price Expectations fell 8% to 118, a new three-year low, with consumer dwelling price expectations pulling back in every state.
This is also the first time since March 2023 that fewer than half of consumers expect dwelling prices to rise.
Chart by Alex Joiner (IFM Investors)
The growing pessimism around dwelling values has been reflected by the recent weakness in the auction market, which has seen the national capital city clearance rate fall below 50%.
The market has also seen a sharp increase in the number of homes listed for sale, reflecting the softer buyer demand.
Source: Cotality
In short, Australians have become increasingly bearish on the housing market and are exercising much greater caution.
