Live: House prices drop and data set to show continued shortfall of homes

Australian house prices are declining in major cities, with new data indicating a growing shortage of homes. This comes from a report by property consultant Cotality, which showed a nationwide fall in August. Cotality's figures revealed a 0.9% decrease in national home prices from July, which had been revised downwards to 1.2%. Nationwide, the value of homes now sits 3.6% below their peak, though they remain 2.7% higher than last year.

Sydney and Melbourne experienced the most significant declines, with a 1.4% and 1.1% reduction respectively. Most capital cities recorded a drop, with Brisbane and Perth experiencing declines of 1.0% and 0.8% respectively after their yearly booms. Cotality's research director, Tim Lawless, noted that the rate of decline in Sydney's prices was now faster than during the previous 2022-23 correction, when interest rate hikes reduced values by 6.6%.

The weakening trend in property values is supported by less transaction activity, according to Lawless, with sales down 15.5% year-on-year. The longer selling periods, increased vendor discounts, and consistently low auction clearance rates all indicate a buyer's market, but buyers are hesitant due to uncertainty. Housing credit growth has begun to slow, and government tax changes have further dampened investor demand.

The Reserve Bank of Australia has raised the cash rate three times this year, reaching 4.35%, with another hike expected amid high inflation. The market anticipates additional rate increases as July's inflation data was unusually strong.