CoreLogic’s daily dwelling values index shows that Melbourne and Sydney home values continue to slow, with Melbourne declining by 0.4% over the past 28 days and Sydney rising by a relatively sedate 0.2%:
The decline in dwelling value growth has been mirrored by the auction market, which has seen clearance rates for Melbourne and Sydney drift lower:
New SQM Research data shows that asking prices across Melbourne and Sydney are falling, pointing to price falls later this year.
According to SQM Research, asking prices in Sydney declined by 1.0% in the month ended 6 August, whereas they fell by 0.9% in Melbourne.
SQM Research managing director Louis Christopher tipped that home values will start to decline in the September quarter.
“Asking prices have been a good leading indicator of actual prices, so our expectation is a fall in housing prices for the September quarter”, Christopher said.
“[Asking prices] is a representation of vendor confidence. When vendors lose confidence, they’re willing to negotiate more, that’s fundamentally what’s going on”.
“Let’s remember when we started the year, there was a great expectation of a rate cut in the March or June quarter. But that never happened. That’s why confidence sapped”, he said.
Menck White auctioneer Clarence White told Domain that Sydney’s housing market has been stagnant for several months.
“It’s been tricky with buyers. There’s been very low confidence with buyers. It is a market gripped by price caution and buyer uncertainty”, White said.
Louis Christopher makes a good point about interest rates. Most people expected the RBA to cut rates in the second half of the year. However, the outlook for rate cuts has been pushed into 2025.
It is also worth noting that affordability is extremely stretched, with prices rising well beyond borrowing capacity:
With Sydney’s median house price approaching $1.7 million while Melbourne values have stagnated, Sydney looks especially susceptible to a correction.
