This article is from the Australian Property Journal archive
THE slowdown in house price growth could give way to a decline between now and a potential interest rate cut in March, according to Domain, which could bring buyers back into a market in which affordability has been stretched to its limits.
Domain’s House Price Report for the September quarter showed several home price records were broken during the period, including house prices in Sydney, Brisbane, Adelaide, and Perth.
Sydney leads all comers with a median house of $1.65 million, followed by Canberra ($1.08 million), Melbourne ($1.02 million), with Brisbane and Adelaide within touching distance of the $1 million mark.
Sydney (up 0.6% in the quarter), Brisbane (by 1.5%), Adelaide (by 4.2%), and Perth (3.1%) have record-high unit prices, with Sydney’s reaching a record high for the first time since December 2021 to cement a full recovery. Unit prices in both Sydney (0.9%) and Melbourne (0.5%) have gained momentum, rising faster than the previous quarter.
“There is more choice for buyers, which means they’ve got more options to negotiate. What we’ve seen is a strong flow of new listings in winter and early spring, and we haven’t seen that matched by the same level of uplift in buyers,” Domain chief of research and economics Nicola Powell told Australian Property Journal.
Auction clearance rates fell to a 2024 low over the weekend.
“We are seeing a shift, and that shift is swaying to buyers,” Powell said.
“When you look at all of the metrics, you’ve got supply rising, days on market starting to lengthen, and discounting is also starting to increase. All of these things point to that general slowdown in market dynamics and that swing towards buyers.
“It will take a spark like a cash rate cut or two that will bring more buyers to market and likely create greater momentum. It’s obviously going to improve borrowing capacity. And it’s likely to improve demand. It will bring more people to market.”
Domain is predicting a rate cut in March.
Powell said there could be more weakness for the final quarter of this year for prices and even going into the first quarter of next year.
“We’ve only just seen for Sydney, for example, a marginal increase over the recent quarter. So it’s quite possible we could see a decline in house price over the final quarter of this year.
“We’re still stuck between an undersupply of housing and a housing crisis and a high cash rate. And I think that the affordability in the borrowing capacity is impacting some buyers. And as a result, people are waiting – or, what you’re seeing is people are steering towards more affordable areas.”
