Australia's Housing Market Suffers Largest Downturn Since Pandemic
Australia is facing its biggest property downturn since the pandemic, with national home prices falling for a fifth consecutive month in August. The decline of 0.9% from July marks the largest drop since COVID-19 hit, according to data from Cotality.
Major cities Sydney and Melbourne led the decline, with falls of 1.4% and 1.1%, respectively. This leaves prices down approximately 7% from their peaks.
The Reserve Bank of Australia (RBA) has warned that interest rates can still go higher due to stubborn inflation, which is cooling economic growth. Data this week is expected to show annual economic growth eased to 1.8% in the second quarter, down from 2.5% in the first quarter.
AMP chief economist Shane Oliver predicts a peak-to-trough home price fall of 10% in this cycle and a turnaround in the second half of next year. However, he notes that the current slump is not significant enough to change the direction of RBA rate moves from up to down.