Home buyers might have a window as property prices drop in 80% of Aussie markets

By Evlin DuBose · · 2 min read
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Collage of a man plummeting down a red chasm like house prices plummeting in Australia.

Six months of rate hikes have finally caught up with us. Research firm CoreLogic reports dwelling prices have dropped in nearly 80% of Australian housing markets over September, on the heels of three back-to-back 50 basis point hikes to the cash rate. 

The decline hit popular markets like Sydney and Melbourne the hardest, with quarterly values falling -7% and -4.2%, respectively.

The Reserve Bank of Australia might not have succeeded in slowing inflation, but they have seemingly dragged the housing market to a considerable slowdown. 

Here’s the latest in Australian property.

Sydney and Melbourne markets falling behind as interest rates weigh heavily on new buyers

Collage of an office worker trying to hold up a downwards arrow.

Rising interest rates have squeezed many new buyers out of home loan affordability, which cools competition at auctions. Vendors hoping for a lively spring selling season instead have to compromise on price just to stay in the game.

With rate hikes totalling 225 bp into September, CoreLogic economist Kaytlin Ezzy explains that the plummeting prices reflect the buyer-starved market.

“It’s not surprising to see significantly more markets recording a decline in value,” says Ezzy. 

“Across the capitals’ house markets, Sydney, Melbourne, Canberra, and Hobart each saw 100% of analysed suburbs experience a decline in values over Q3, with Hobart the only city also recording a quarterly decline in all unit markets analysed.”

Darwin, Perth, and Adelaide remained the most resilient cities to the downswing, making up only small proportions of the overall quarterly decline. However, Ezzy explains this reflects their delayed price peak more than their insulation to market shocks. Last year’s property boom only swept them in early 2022. 

Sydney and Melbourne, unsurprisingly, had the highest share of quarterly price falls, especially in expensive suburbs like Asquith (which saw a -13% fall in the September quarter). Inner city and more affordable suburbs remained relatively stable, with some areas like Rushcutters Bay even reporting a slight rise in values (+0.6%).

Nationwide, the CoreLogic Home Value index showed a -4.6% decrease across the combined capitals – much steeper than the previous quarter’s more moderate -0.8%.

What does a downturn mean for buyers and sellers?

Collage of two people falling in up and down arrows, like buyers and sellers in a falling property market.

Whether you’re selling or buying in a falling market, it can make for a unique and confusing landscape to navigate. 

While buyers may have more negotiating power and better prices to look forward to, supply will likely dwindle as sellers hold off now in favour of improved capital growth down the track. 

Hefty interest rates have also made mortgage repayments expensive prospects, so there are significant pros and cons to weigh up depending on your circumstances. 

Some of the main points to consider when buying or selling in a falling market includes the following:

  • Which particular markets you’re in.
  • What price expectations you have. 
  • Whether you can weather a looming recession.

Research is key to making an informed decision either way. You can keep a finger on the property pulse through our home loan news hub and compare mortgage products below.

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Last updated 27 July 2024 Important disclosures and comparison rate warning*

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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