Property prices are coming down across most capital cities in Australia, says CoreLogic’s Eliza Owen.  

Owen, the Head of Australian Research, said that the Reserve Bank of Australia’s recent cash rate hikes were creating downward pressure on the property market.  

“There are several reasons that that higher cash rate is going to be dissuading home buyers. The high inflationary environment in general has really weighed on consumer sentiment and a lot of inflation has been concentrated in areas of consumption that are hard to cut back on: things like rent, fuel and groceries. So, that’s going to mean that renters who are aspiring to own might be able to put less towards a deposit,” Owen said.  

“They’re not being able to save quite as much and of course, when people aren’t certain about the economic environment more broadly, they’re not as enthused about making a big-ticket purchasing item like a house or a unit. And then of course, as your mortgage rates go higher, the cost of debt goes up, so that reduces demand for housing debt.” 

CoreLogic found that property values had declined about 2% during the period between April and July this year.  

The RBA raised interest rates by another 50 basis points to 1.85% at the start of August, the fourth rate hike in as many months.   

“Consumer sentiment’s actually back down at its lowest levels we’ve seen since the onset of COVID and as at the global financial crisis. So, that’s going to reduce demand for housing and reduce sales volumes over the course of those cash rate increases and the inflationary challenges that we’re seeing in the economy,” she said. 

Looking at the capital cities, Owen said Sydney had had a very steep decline in values during the three months to July, sitting about 5% lower over that time.  

“Of course, this is off the back of an upswing in property values that was about 28% in total. So, the declines don’t really match what we’ve seen in the upswing just yet, but it is a relatively steep decline in those more expensive markets of Sydney and Melbourne,” she said. 

Owen said Brisbane and Adelaide were still either in the positive territory or flatlining, however their growth rates had slowed right down.  

She said those markets were moving into a decline as well and had had more of a sustained upswing because they were relatively affordable markets.  

Housing affordability and market conditions 

Owen said there had been a 40% increase in regional property values over the course of the upswing overall, compared to an about 25% increase in capital city home values.  

“Now, however, it is clear that both regional Australia and capital city markets are moving into the downswing phase, and property prices are coming down. So, regional Australia was very popular through the course of the upswing, but certainly not immune to a decline in home values,” Owen said.  

“One of the silver linings of the downswing that we’re seeing at the moment is a reduction in property values, which means some of our affordability metrics are improving, particularly the deposit hurdle. For those that had been saving over the course of the past few years, their savings represent a bigger portion of a property, if they’re looking to put a deposit down. Other metrics, of course, like mortgage serviceability, are deteriorating amid higher mortgage rates.” 

The nature of the property downturn was also translating into sales and listings volumes. 

She said they were seeing more properties available for sale, as total stock levels accumulated. 

“We’re seeing a slowdown in the time it takes to sell a property, which is good news for buyers who have more time to get their finance and due diligence together. But there are always pros and cons of buying in any particular point in the cycle,” Owen said. 

“New listings are tracking fairly well, higher than where they were this time last year. Though, they are converging to a previous five-year average. Whereas I think the rate at which new listings were hitting the market towards the peak of prices was a lot faster earlier on in the year. So, the rate at which new listings are hitting the market is starting to slow down a little. But because they’re taking longer to sell, total stock levels are accumulating.” 

Owen said properties were taking longer to sell, with typical days on market across Australia sitting at about 32 days, up from a low of 20 days in November last year. 

Housing finance  

ABS housing finance data showed that the volume of new housing finance secured declined about 4.5% over the month of June, Owen said.  

“This decline varied across different segments of the market. Most of the falling away in that new housing finance secured came from the investor segment. It accounted for about half of the decline over the month,” she said.  

“What’s so interesting is that I think a lot of what we were expecting was that first home buyers were going to be jumping on the lower prices, or investors on the incredible growth in the rental market. That doesn’t seem to be the case by this data as of yet. It is a little bit lagged. It could be that these buyers are looking for a little more certainty around where the cash rate goes before getting back into the market. 

“But it really does seem to be the owner-occupier changeover buyer, who’s seeing a little more resilience to rising rates. And that could be off the back of the fact that they have equity behind them. They have a home that they’re selling, so they’re a little more resilient to rising mortgage costs.” 

Owen said another factor that they had seen, even before the recent reduction of housing finance was that lending conditions were becoming a little less risky. 

“This is another benefit of the slow-down in the demand for housing finance – you don’t get as high debt-to-income lending or loan-to-income lending as a result of that reduction in demand for debt… Some of the factors that are considered by our regulators, around potentially risky lending, are showing a little more conservatism as we move through the cycle,” she said. 

Owen said an extraordinary trend that they observed through the housing market upswing was the uplift in housing finance that went out on fixed-term lending. 

ABS data showed that the fixed-term portion of total housing finance increased from about 15% pre-pandemic to a peak of around 46% in August 2021. 

“Now, no surprise, that that coincides with a recent low in the average fixed-term home loan rate. As those rates have progressed over time, and fixed rates are actually now sitting much higher than variable rates, we’ve seen finance skew back towards those variable terms. And lending going out on fixed terms is now back below pre-COVID levels, sitting at about 9.5%,” Owen said.   

“So, this is, in a way, something that reiterates the stability of the housing lending space as well, because a lot of that fixed-term lending provides a bit of a buffer for new borrowers, as we do start to see an uplift in mortgage rates.” 

Rental conditions 

Owen said there had been extraordinary growth in rent values recently, with growth in rents outpacing capital growth figures over the past six months.  

“This is something that, for some investors, it might increase demand and interest in the housing market over the short- to medium-term as well. But while yields are good news for investors, in terms of that rising yield profile, we’re seeing plenty of data to showcase some of the struggles that people are seeing in the rental market as well,” Owen said.   

She said rental costs had been increased by a real shortage of stock in the market.  

CoreLogic found that there were 100,000 dwellings advertised for rent at the moment, whereas there should be closer to about 150,000. 

“That remains one of the significant challenges, particularly for people on low incomes, who tend to preside more in the rental market anyway. I guess another way of looking at it could be that it is also an incentive to buy, if you can afford to, to get out of the rental market and some of the insecurity that we’re seeing in that space at the moment,” Owen said.


Owen spoke at the Australian Property Institute’s NSW 57th Annual Kiparra Day Conference in August. 


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