High-End Australian Homes See Double-Digit Price Declines While Lower-End Properties Hold Steady

Analysis by the property data firm Cotality shows that upper-quartile house values in Sydney and Melbourne have dropped more than 10 % from their recent peaks. In Sydney, homes valued at $2.1 million and above are part of this segment; in Melbourne and Canberra the threshold is roughly $1.2 million. National dwelling values fell 3.1 % over the past three months, although the 12-month trend still shows modest growth.

The Guardian

The downturn follows a combination of rising interest rates and recent tax reforms that reduced the attractiveness of investment purchases. Critics of the Labor government’s May budget reforms point to the removal of negative-gearing benefits for many new investors as a catalyst. The same reforms, however, have lowered barriers for prospective owner-occupiers. Rising oil prices linked to the Iran conflict have added pressure on interest rates, but employment levels remain robust.

The Guardian

Peter Esho, economist and chief executive of 13x, observes a “rotation of buyer types.” Investors have retreated, while first-time buyers and other owner-occupiers who were previously priced out are entering the market. Buying activity stays strong for properties below the caps that qualify for the government’s first-home-buyer 5 % deposit scheme—$1.5 million in Sydney, $950,000 in Melbourne and $1 million in Brisbane. Lower-quartile houses in Sydney and Melbourne have fallen less than 6 % and 4 % respectively from their peaks.

The Guardian

• “Investors have moved away from the market, but first-time buyers and other owner-occupiers that were priced out of the market are stepping in,” — Peter Esho, economist and chief executive at 13x.

The Guardian

• “The single biggest risk to the overall housing market is unemployment,” — Peter Esho, economist and chief executive at 13x.

The Guardian