This week’s housing market data from Cotality showed that buyer demand continues to fade, sending prices lower across the major capital cities.
In the week ended 24 July, home values declined across all major capital city markets, including Perth, with the 5-city aggregate index falling by 0.2%.
Over the first 24 days of July, values have fallen by 0.6% at the 5-city aggregate level, led by Sydney and Melbourne, with only Perth (0.25%) recording an increase.
So far, home values at the 5-city aggregate level have fallen by 2.0% from their most recent peak, with Sydney and Melbourne recording declines of nearly 5%. The other major capital city markets – Brisbane, Adelaide, and Perth – are in the early stages of their respective price corrections.
The collapse of auction clearance rates has underpinned the decline in home values. Last weekend, the final national auction clearance rate fell to 45.3%, representing the eighth consecutive week of clearance rates below 50%. Melbourne was the only capital city market to record a final auction clearance rate above 50% (i.e., 50.6%).
Source: Cotality
The following charts plot the monthly average final auction clearance rates against dwelling value growth.
At the combined capital city level, the final auction clearance rate over the first three weeks of July was only 47%, marginally above the 46% recorded in June.
Sydney’s final auction clearance rate averaged 47% over the first three weeks of July, slightly above the 45% recorded in June.
Melbourne’s final auction clearance rate averaged 50% over the first three weeks of July, above the 47% recorded in June.
Finally, Brisbane’s final auction clearance rate has collapsed to only 31% over the first three weeks of July, the city’s lowest reading since April 2020 during the height of the COVID-19 pandemic.
Despite the modest rebound in auction clearances across the combined capital cities, the overall weak readings are pointing to further significant price falls.
Meanwhile, amid the slump in buyer demand, for-sale listings continue to swell, rising by 18.4% across the combined capital cities this week versus the same time last year.
Source: Cotality
As you can see, listings have grown especially strongly in Brisbane (27.4%), Adelaide (21.6%), and Perth (22.3%), although they are significantly higher across all mainland capital city markets.
With demand stalling and listings rising, there is only one direction for home prices: down.
