Australia’s housing market has lost significant momentum following last month’s 0.25% interest rate hike from the Reserve Bank of Australia (RBA), which has hit Melbourne and Sydney particularly hard.
CoreLogic’s daily dwelling values index has recorded a sharp slowing in dwelling value growth, driven by Melbourne and Sydney.
This has more than offset ongoing strength across Brisbane, Perth and Adelaide, and pulled growth down at the 5-city aggregate level:
The weakening price growth has been matched by the auction market, which recorded a final combined capital city clearance rate of only 57.6% last weekend, which was the lowest final clearance rate of 2023:
Source: CoreLogic
Sydney’s final clearance rate dived 5.5 percentage points last week to its lowest rate of the year at 57.0%.
Melbourne’s final clearance rate held below the 60% mark for the third consecutive week, with 56.2% of auctions returning a successful result. This was down 2.2 percentage points from the week prior (58.4%), and the second weakest result of the year.
The next chart shows that the plunge in the auction clearance rate portends a sharp drop in home values:
Meanwhile, listings are growing across Melbourne and Sydney, which also helps to explain their decelerating price growth:
Source: CoreLogic
It’s clear that the latest rate hike from the RBA has knocked the wind out of Melbourne’s and Sydney’s housing markets, which is dragging down results nationally.
The situation should continue in 2024 as the labour market softens and mortgage stress rises.
