Australian Housing Market Hits Snag as National Values Fall 3.1%

Australia's housing market has seen a significant downturn, with national dwelling values falling 3.1% in the three months through August. This decline is not limited to luxury pockets but has spread across the country, affecting even Brisbane, Adelaide, and Perth.

The most pronounced correction is in expensive detached homes, with upper-quartile house values down 10.7% from their peak in Sydney and 10.5% lower in Melbourne. In contrast, units and cheaper homes have held up relatively better, supported by their lower entry prices.

The slowdown has also led to a decrease in mortgage applications, with CBA's own funnel showing a drop of about 15% over 12 weeks and 17% from a year earlier. This contraction in lending pipeline is expected to intensify competition for high-quality borrowers and put pressure on lending margins.

The Reserve Bank of Australia's next decision on September 29 will be crucial, as the current tightening has already had an impact on the housing market. Assistant Governor Sarah Hunter noted that turnover had fallen in the March and June quarters and probably declined again in the current quarter.