- In June, Australian house prices recorded the largest monthly decline in three and a half years, indicating that the high interest rate environment is continuously weakening the resilience of the housing market.
- Research institutions pointed out that national house prices fell by 0.4% month-on-month. The slowdown over the previous months suggests that the market may have peaked in March, with an overall decline in the second quarter.
- In addition to rising borrowing costs, pressures from living expenses, adjustments in investment property taxes, and weakened home-buying sentiment are also simultaneously suppressing demand and transaction pace.
Sydney and Melbourne Lead Core Market Decline
The decline in June house prices was mainly driven by Sydney and Melbourne, with monthly declines of 1.2% and 1% respectively. As the two markets with the highest national weight, their simultaneous weakening directly dragged down the overall data, also reflecting that high-priced cities are more sensitive to changes in financing costs.
Cooling Trend in Medium-Sized Cities
The medium-sized capital cities that have supported national house prices in recent years are also starting to lose momentum. Adelaide turned flat, Brisbane saw only a slight increase, and Perth's growth also slowed, indicating that the strong trend previously driven by population inflow and tight supply is cooling down.
Dual Pressure from Interest Rates and Affordability
Cotality believes that even before further interest rate hikes, affordability issues have already begun to suppress home-buying demand. High living costs, pessimistic sentiment, and tax adjustments in the budget are appearing simultaneously, making potential buyers more inclined to wait and see, with mortgage application data also weakening.
Market Enters High-Level Correction Phase
After Australian house prices have cumulatively increased by more than 30% over the past five years, they are now entering a high-level correction. Although year-on-year growth remains positive, continuous declines and historical data revisions mean that the market focus has shifted from "how much more can it rise" to "how long will the correction last."
