So, what then is the outlook for the Australian property market? Are we headed for a crash, or even a slump?
Both Lawless and Powell point out that one of the biggest issues in property is affordability, with the Federal Government announcing a national target of 1.2 million “new, well-located homes over the next five years” as part of its Housing Support Program in July 2024.
“I think it’s fair to say that the federal and state governments will be doing everything they can to get more housing supply into the marketplace, given their 1.2 million target over the next five years for completed dwellings,” Lawless says.
Powell adds that a median house price of $1.66 million in Sydney is extraordinary. And while sellers have responded to this record pricing and momentum and have continued to list new properties for sale, absorption of those properties has slowed down.
“Listings are coming to the market, but they’re not being sold as quick. What that means is we’re seeing a bit of a build-up of stock. And when you start to see that, that’s a telltale sign that market dynamics are on slowdown. Breaks are on. Buyers have got choice, and what you see then is slower rates of price growth, or prices start falling, which we have now got in certain markets,” she says.
The CoreLogic Home Value Index for Melbourne, for example, was down 0.9% for the quarter to end July.
“That’s a good example of some downward pressure in a market that doesn’t have the same growth drivers as a lot of other markets around the country, and it’s also had a better supply response historically as well, and that’s probably, more broadly, the underlying factor that’s supporting prices in Australia is just this ongoing undersupply of housing,” Lawless says.