The national downturn has broadened beyond the major capitals as previously resilient cities lose steam, with Brisbane’s and Adelaide’s home values falling for the second consecutive month.
New data has shown that Adelaide and Brisbane have continued to drastically slow down, as national home values record their largest drop in more than three years.
Cotality’s Home Value Index for July showed national home values fell by 0.7 per cent, the largest single-month decline since December 2022.
Brisbane and Adelaide, which previously held firm, recorded drops of 0.6 per cent and 0.2 per cent respectively, marking their second consecutive month of declines.
Sydney and Melbourne continued to lead the downturn, with home values dropping by 1.4 per cent and 1.2 per cent respectively over the month.
According to Cotality’s head of research, Gerard Burg, demand had been significantly impacted by affordability pressures due to interest rate rises, federal tax reforms, and the conflict in the Middle East.
“That’s helped flow through into this very pessimistic consumer confidence that we have at the present time, and so there’s been a cumulative impact,” he told REB.
He said Adelaide and Brisbane’s declines were the result of markets remaining tight for an extended period of time due to supply constraints and strong demand.
“When we look over the five years, the three mid-tier capitals, Perth, Brisbane and Adelaide, had really outperformed the rest of the market,” he said.
“In doing so, they were perhaps more exposed to the affordability constraints that have emerged.”
Because of this, Burg said there had been a steady increase in the available stock to buy in recent months.
“Brisbane’s gone from being 25 per cent below the five-year average in terms of its stock, to now up to around 6 per cent, in terms of its level above average.”
Burg said Adelaide had followed a similar pattern, with much more stock now available, causing the previous upside pressure to evaporate and resulting in less competition among buyers.
“Across the country, buyers have been pushed out of the market a bit more recently, and that’s starting to feel the effect in both of those locations too.”
The last bastion
Meanwhile, Perth recorded only modest value growth over the month of 0.1 per cent, following a decline of 0.5 per cent in June, despite seeing increases late last year close to 3 per cent.
“Now it’s just teetering on the edge of joining the rest of the country,” Burg said.
While listings at the start of the year were 50 per cent below the five-year average, in July, they were just 11 per cent below.
“It just highlights how that real tightness in the market is starting to unwind.”
Burg said the city was not at the point of downturn just yet, as at least three consecutive months of decline would be required.
“But certainly the rapid growth period that we had seen looks like it’s over.”
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