Australian House Values Fall in 82% of Suburbs as Auction Clearance Rate Hits Three-Month Low
New realestate.com.au data shows house prices dropped in more than four in five suburbs over three months, while the combined capital auction clearance rate sank to 45%.
Australia's housing downturn is no longer confined to a few expensive pockets. Exclusive realestate.com.au figures show average house values fell in 82.2% of suburbs nationwide over the past three months, while only 10.6% recorded growth and 7.1% were unchanged. At the same time, weekend auction results have weakened, which is why the topic is drawing attention.
How widespread are the falls?
The data covers the first full quarter since the May federal budget reforms, which included caps on negative gearing. Analysts also point to interest rate rises and war abroad. FoundIt research director Kent Lardner called it a "perfect storm" that can't be pinned on one cause.
Units have fared little better. Values dropped in 79.7% of suburbs with available data, while about 14% saw gains and 6.3% were flat.
Sydney recorded the most widespread declines. House prices fell in nearly 97% of its suburbs, with only six showing growth. Sydney is described as the country's most interest-rate-sensitive market because of higher debt levels.
In Melbourne, only 34 of roughly 400 suburbs saw house values grow, and many of those were top-end areas. REA Group economist Luc Redman said recent numbers could indicate "stabilisation" and that Melbourne is likely to bottom out sooner than other areas.
In Queensland, nine in 10 suburbs recorded falls in the September quarter. Homeowners in the hardest-hit suburbs lost up to $244,000 in equity. Greater Brisbane dwelling values fell 0.2% in September, the sixth straight monthly fall.
Auction clearance rates slide
Five weeks into spring, Cotality reported the combined capital clearance rate at 45.4%, its lowest since July. There were 1,212 auctions last week, 38.1% fewer than the 1,958 held a year earlier. Melbourne and Sydney accounted for most of the drop.
There was a small bright spot: both cities had higher clearance rates than the week before. Sydney's rose 0.9 percentage points to 49.3%. Melbourne held 666 auctions, well above the 284 held over the Grand Final weekend.
Does cheaper mean more affordable?
Not necessarily. SBS reports prices are now more than 5% below their peak, and the major banks and analysts predict a fall of 7% to 15%. Morgan Stanley has forecast the biggest correction in 40 years.
But four rate hikes this year cut borrowing capacity by about 9%, or $90,000, for a median-income household, according to Cotality. Roy Morgan research found more than 32% of borrowers are at risk of mortgage stress, up 8.4 percentage points since January.
Ray White economist Atom Go Tian said an unintended effect of the budget is that first-home buyers and owner-occupiers are also pulling back.
What it means for you
Lower prices haven't translated into easier buying, because borrowing power has shrunk at the same time. Owners in the hardest-hit suburbs have seen equity fall, and mortgage stress is rising. Buyers may want to check their own borrowing capacity under current rates rather than rely on headline price falls. Weekly Cotality auction results and the next realestate.com.au quarterly data will show whether Melbourne's early signs of stabilisation spread elsewhere.
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Quick answers
Which city has the most widespread house price falls?
Sydney, where house prices fell in nearly 97% of suburbs over the past three months, with only six recording growth.
Is Melbourne's market recovering?
Not yet. Falls continue, but an REA Group economist says the data could indicate stabilisation and that Melbourne may bottom out sooner than other areas.
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