Mat Tiller's Market Update

The downturn has widened as buyer confidence softens

Buyers have more choice and more negotiating power, but demand is still there; well-priced homes are still selling and tight supply should limit the downside.

Australia’s housing market softened further in July. Cotality’s Home Value Index fell 0.7% over the month, the largest monthly fall since December 2022. Values are now down 1.9% over the quarter, although they are still 5.3% higher than a year ago, with the national median dwelling value sitting at $928,421.

The important point is that the downturn has now widened. Sydney and Melbourne are still leading the decline, down 1.4% and 1.2% over the month, but Brisbane and Adelaide have also moved lower. Brisbane fell 0.6% in July and Adelaide was down 0.2%. Perth, Hobart and Darwin were still positive, although the pace of growth has clearly slowed compared with earlier in the cycle.

The main issue is still demand. Higher interest rates, affordability pressure, cost of living and tax policy uncertainty are all weighing on confidence. Buyers have not disappeared, but they are more cautious. They are taking longer, comparing more closely and negotiating harder.

That is also showing up by price point. Higher-value homes are being hit hardest, with upper-quartile values down 3.2% nationally over the three months to July. The lower quartile is still holding up better, which shows affordability is continuing to shape where demand is strongest.

Listings are also changing the balance of the market. New listings were only 1.0% higher than the same time last year, but total listings were 14.9% higher. That tells us stock is building because properties are taking longer to sell, not because there has been a big surge in new supply. Nationally, the median time on market has risen to 35 days, while vendor discounting has widened to 3.8%.

The rental market remains one of the key supports. National rents are up 5.9% over the year, vacancy is still low at 1.7%, and gross rental yields have lifted to 3.72%, their highest level since April 2023. That said, higher borrowing costs and tax changes are still keeping investors selective.

For sellers, this is a market where pricing and expectations matter. Good results are still possible, but buyers have more choice and less urgency. For buyers, conditions are improving, with more stock, longer selling times and more room to negotiate.

Overall, the market is likely to stay softer in the near term. Confidence is still fragile and demand has cooled, but low unemployment, population growth, tight rental conditions and constrained new supply should help limit the downside.