Australia enters ninth housing downturn amid market uncertainty
- 2 days ago
- 2 min read
Australia’s property market has entered its ninth downturn in three decades, with Sydney and Melbourne expected to experience the biggest falls.
New analysis from Domain forecasts house prices could drop 7 per cent in Sydney and 8 per cent in Melbourne over the next financial year as higher interest rates, tax changes and weaker buyer confidence weigh on the market.
More affordable markets such as Brisbane, Perth and Adelaide are expected to continue seeing growth, supported by stronger demand and lower entry prices.
The current slowdown follows three interest rate increases, changes to capital gains tax and negative gearing rules, along with broader economic uncertainty.
However, previous market cycles suggest downturns are usually temporary. All eight past declines were followed by recoveries, with property prices eventually reaching new highs.
Historically, housing downturns lasted around eight months on average, with prices falling about 2.9 per cent. Recovery periods have typically been longer, delivering average growth of around 32 per cent.
Domain economist Nicola Powell said interest rates, borrowing capacity and buyer confidence would determine how quickly the market improves.
Major banks are also predicting further price falls. NAB expects Sydney and Melbourne to record declines, while other banks including CBA, ANZ and AMP forecast a national slowdown over the next year.
Despite the pressure on homeowners, economists say the correction is unlikely to trigger a wider economic downturn.
AMP deputy chief economist Diana Mousina said slower property growth could reduce household spending but may also help ease inflation pressures and support future interest rate decisions.
Source : 9 News
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