In my 15 years covering the housing market at MacroBusiness, I have never seen housing conditions as weak as they are now.
According to Cotality, monthly sales volumes have now been lower than a year earlier for nine consecutive months, with September’s sales tracking 20.9% below the same time last year:
Source: Cotality
Meanwhile, listings are piling up across the capital cities, up 22.0% year-on-year, led by Perth, Brisbane, and Adelaide:
Source: Cotality
The median days on market have shot higher, especially across the capital cities:
Source: Cotality
Finally, vendors are furiously slashing asking prices in a bid to meet the market, but buyers still aren’t taking the bait:
Source: Cotality
The swelling supply of listings amid weakening buyer demand has sent prices plummeting, with Domain recording price falls across every capital city market for only the second time on record in the September quarter:
House prices fell 4.7% nationally, the steepest quarterly drop on record. Perth saw the sharpest decline (-7.4%), followed by Brisbane (-5.4%). Australia’s biggest property markets, Sydney and Melbourne, recorded their largest quarterly house price drop in four years, falling by 4.7% and 3.3%, respectively.
“What began as weakness concentrated in some cities has broadened considerably”, Nicola Powell from Domain said. “The balance of power has shifted towards buyers”.
“Homes are taking longer to sell, there is greater scope to negotiate, and sellers are having to be more realistic about price expectations”.
Cotality’s daily dwelling values index paints a similar picture, with values falling 7.5% from their early April peak across the five major markets, and all markets recording significant falls.
Moreover, price falls are happening across all price points, according to Cotality:
Source: Cotality
Gerard Burg from Cotality told the ABC that “it’s been a demand-led downturn”, adding that “the median house really appears kind of out of reach of the median income household across much of the country”.
Independent analyst Cameron Kusher agrees, noting that “confidence has really evaporated, affordability is very stretched, and borrowing capacity is reduced dramatically” following four rate hikes this year.
“People just aren’t in a position or able to pay the prices that a lot of these properties are worth at the moment”, he added.
“The first time is pretty scary as it is, and I think a lot of them are looking at it and saying, ‘Well, prices are falling, why would I jump in now when there’s quite a lot for sale, if I wait another six or 12 months properties will probably be cheaper'”, Kusher said.
“I just don’t think first home buyers have that urgency anymore”.
Following RBA deputy governor Andrew Hauser’s ultra-hawkish commentary this week, financial markets lifted their interest rate expectations:
Chart from Alex Joiner (IFM Investors)
With mortgage rates already nearing 7%, additional interest rate tightening from the RBA will inevitably send prices sharply lower.
