Prospective homebuyers could pay $53,000 less for properties after house prices fell in one of the fastest falls in history.
The last domain report shows that house prices in Australian capitals fell 4.9 percent in the latest quarter from a peak in March.
It was the fastest quarterly drop on record.
The median home price sits at around $1,022,000, down $53,000 from the June quarter but still 21.3 percent higher than the pandemic low of $999,000.
Apart from Adelaide, house prices in all capitals fell with the markets in Sydney, Melbourne and Canberra experiencing the fastest falls ever recorded.
“We’re going through real estate market conditions that many buyers and sellers have never experienced in their lives,” said Nicola Powell, senior economics researcher at Domain.
On the WA capital, the report says: “Perth’s housing market is now unanimously falling as house and unit prices declined during the September quarter.
“House prices are now 1.5 percent below the June 2022 price peak, down around $10,000 (to $645,946). This is the steepest quarterly drop in three years for house prices.
“Despite the pace of declines this quarter, house prices are still 7.9% higher than a year ago. This is a significant turnaround for the Perth housing market that halts the rally that took the city’s house prices to a new record for the first time since 2014.
“Unit prices are down a further 2.4% during the September quarter, down about $9,000.”
Adelaide bucked the general trend with house and unit values hitting record highs, but the South Australian market has started to run out of steam.
“Obviously, buyers have reduced their borrowing capacity, but they are also more aware of the affordability of mortgages and many are now discounting more interest rate increases,” Dr. Powell told the AAP.
Buyers have turned away from homes, with units outnumbering larger homes in most capital cities.
In Brisbane and Hobart, unit prices increased while house values fell, and Perth and Darwin were the only cities where house prices remained stronger than units.
“Affordability issues are going to help shift demand away from houses and into units, and we’re already seeing that,” Dr. Powell said.
House prices may be falling, but competition in the rental market remains fierce.
With fewer investors buying homes to rent, the limited supply of shares, coupled with strong demand, is causing steep increases in advertised rental prices.
A separate report shows rental availability fell sharply, with the number of rental properties listed on realestate.com.au falling 20.5 per cent in the year to September.
Low rental availability is driving up rents, as landlords can afford to raise rents when renters have limited options.
Rents rose 4.3 percent in the three months through September, the fastest quarterly rate on record.
PropTrack director of economic research Cameron Kusher said investor activity was more subdued than normal.
“With fewer investors buying homes to rent, the limited supply of shares, coupled with strong demand, is causing further increases in advertised rental prices,” he said.
Kusher also said regional rental markets were generating some heat, but big cities were becoming more competitive.
“This is being driven by the return of many people who migrated regionally during the pandemic to capital cities and the increase in migration abroad,” he said.
The Albanian government has faced criticism for not increasing rental assistance payments for low-income tenants in the budget, but has outlined a plan to boost the supply of affordable housing in the medium term.
Central to the plan is a $350 million Commonwealth investment beginning in 2024 to attract super funds and other institutional investors to the market by bridging the gap between market rents and subsidized rents.
Housing Minister Julie Collins said the newly signed housing deal seeks to bring all levels of government and industry together to solve the housing crisis.
“This is about looking at what the barriers are to getting more social and affordable housing off the ground,” Ms Collins told ABC radio.
She said the commitment to build a million new homes was aspirational despite criticism that the goal is roughly in line with what the industry normally produces.
Ms. Collins said the compromise would help keep new home construction going despite an expected recession.
“Some past government programs have brought construction forward, and construction was expected to drop sharply in the second half of next year and the years after,” he said.
“So this is an opportunity for Australia’s governments, state and federal, to step up and fill that gap and get more affordable housing on the market.”