Sydney and Melbourne Lead the Drop
House prices in major Australian capital cities have fallen, with Sydney and Melbourne experiencing the most significant declines in June, according to new data from CoreLogic. The national average across capital cities dropped by 0.4% in June, marking the first monthly decline since early 2023.
Sydney's median house price fell by 0.7% to $1.395 million, while Melbourne saw a 0.5% decline to $935,000. Adelaide and Canberra also recorded falls of 0.3% and 0.2% respectively. Brisbane and Perth were the only capitals to see growth, though at a slower pace than previous months.
Factors Behind the Decline
CoreLogic's research director, Tim Lawless, attributed the downturn to a combination of high interest rates, reduced borrowing capacity, and increased supply. "The persistent high cost of borrowing is finally taking its toll on buyer demand, particularly in the more expensive markets like Sydney and Melbourne," he said.
Additionally, the number of new listings has risen by 8% compared to the same period last year, giving buyers more choice and reducing urgency. Lawless noted that affordability constraints are also pushing buyers towards cheaper units or regional areas.
Impact on Homeowners and Buyers
For existing homeowners, the decline may erode equity, especially for those who purchased at peak prices. However, for first-time buyers, the softening market could offer more opportunities. "We're seeing a shift in market dynamics that could benefit buyers who have been priced out in recent years," Lawless added.
The Reserve Bank's decision to hold the cash rate at 4.35% has kept mortgage repayments high, with variable rates averaging around 6.5%. This is squeezing household budgets and limiting how much buyers can borrow.
Outlook for the Coming Months
CoreLogic expects further modest declines if interest rates remain elevated. However, a strong labor market and population growth are providing some support. "We're not predicting a crash, but a gradual correction is likely until there's a clear signal on rate cuts," Lawless said.
The data also showed that regional areas are outperforming capitals, with combined regional prices rising 0.2% in June. This suggests some buyers are seeking more affordable options outside major cities.
