This chart tells you everything you need to know about the downturn in property prices
Property prices are up 78% since 2020, so the decline to date has erased only one year of gains. And it’s made the market more affordable for first-home buyers.
The Australian housing market has entered a notable downturn, marked by a 5.2% decline in national property values since the March peak, according to Domain property price series. This downward trend has raised concerns among political figures, with Opposition Leader Angus Taylor describing the situation as "in freefall". The market downturn appears to be part of a broader, multi-year decline already in progress, following the first interest rate hike in February.
Experts suggest that the budget's stricter rules on negative gearing and capital gains tax might have contributed to a 2% price reduction over a couple of years, in line with previous analysis. The Reserve Bank of Australia's recent interest rate hikes, with a potential for at least one more rise in November or 2027, are expected to further drive down house prices.
Experts estimate a 10-15% price fall as a reasonable estimate, which would be a more severe decline than any previous downturn (5-10%). While this would expose some first home buyers to negative equity, most homeowners already have equity, especially those who purchased before 2020. First home buyers with substantial financial backing from family are likely to benefit the most from the current downturn.
Reduced property prices will likely lead to a decrease in sales, impacting the real estate industry and potentially causing job losses. The downturn will also affect government revenue from stamp duty, potentially prompting calls for a shift towards a broader land tax system.
Written by urgent.news from The Conversation AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
