Sydney and Melbourne home values drop as housing market cools in May | ABC NEWS

Added: 2026-06-02

[00:00:00]House prices in Sydney, Melbourne, and even Canberra have fallen slightly in May as housing prices slow down across the country. The latest data from Market Analytics firm CoreLogic seems to confirm what many people have been seeing at open homes and at auctions over the past few weeks. Tim Lawless is the director of CoreLogic's research and joins us now. Tim, welcome back to News Breakfast.

[00:00:23]>> Good morning, James.

[00:00:24]>> If we can just start with the data, where are you seeing the biggest price falls?

[00:00:30]>> Absolutely, it's Sydney and Melbourne.

[00:00:31]Both these markets were down nearly 1% over the month of May.

[00:00:36]But this isn't recent. We've been seeing values trending lower in those markets since they peaked back in November, but it really does look like the rate of decline is gathering some momentum now.

[00:00:47]Even the mid-size capitals have seen a halving of their growth rates from very strong positions, I would say, but uh a market like Perth rising in value 1 and 1/2% over the month. At the end of last year, it was 3% growth month on month.

[00:01:00]So, I think we are seeing a fairly widespread easing in conditions.

[00:01:05]>> We've been hearing anecdotally that essentially transactions have rapidly slowed down. People who are looking to sell are holding their properties back.

[00:01:13]People who are looking to buy are waiting to see what happens. Is that being reflect reflected in clearance rates?

[00:01:20]>> Yeah, absolutely. We saw clearance rates over the weekends get down into the low 50% range. In fact, at 54%, that's the lowest preliminary clearance rate we've seen since early 2020 when COVID was first becoming a thing. So, we're definitely seeing that fit between buyer and seller pricing expectations has really split apart. I think a lot of sellers are still hoping for yesterday's prices, but of course buyers are now very much in the driver seats and are expecting to see some discounts.

[00:01:54]>> What What mean for first home buyers do you think? Because if the market does cool a bit and prices go down, presumably it makes it easier for people to get in, but at then at the same time we're seeing that for many young people it's actually harder at the moment to get a loan because interest rates are higher and because banks are as taking in all the different changes that are flowing through to the market into their calculations about affordability.

[00:02:17]>> Well, that's the thing. I mean, affordability is clearly improving as prices come down, but serviceability is all the more challenging as interest rates are now elevated. And don't forget, I mean, any borrower needs to be demonstrating an ability to repay their debt at 3 percentage points higher than the going rate. So, that generally means a mortgage serviceability assessment above 9% interest rates.

[00:02:42]Uh on top of that, confidence is very low, as well. So, I think a lot of first home buyers would probably be a little bit reluctant to buy into the market now knowing that we'll probably see some further reductions in prices going forward.

[00:02:55]So, for the moment, it does look like a bit of a stalemate where a lot of buyers are simply just sitting on their hands.

[00:03:01]>> Tim, with previous downturns, we've seen them essentially not last that long because there's been an issue with supply. And we still have that issue with supply. There's simply not enough homes around the country. What does history tell us about how long these sorts of downturns can last?

[00:03:16]>> Yeah, it's a it's a great question. And and typically we see an Australian housing downturn last, you know, 12 months, maybe 18 months. The largest downturn we've seen historically, at least over the past 40 years, was about an 8% fall across the combined capitals, which was back between 2017 and 19 during a credit crunch. That was when we had the Royal Commission and and macroprudential policies were in place.

[00:03:39]Um we also saw pretty sharp fall in values as interest rates rose off their record lows from mid-22. That was about an 8% decline, as well, across the capital cities. So, the history is is a relatively mild one for corrections uh across Australia. And as you say, there's generally some sort of a lifeline thrown to the market like uh um fiscal or monetary policy support coming through.

[00:04:02]>> Just before I let you go, uh the government has made a lot of its efforts to try to build more homes. Uh it's a concerted push that states are engaging in as well.

[00:04:12]Does it is their job a lot harder though in a declining market? Will developers at the same time be looking at this, looking at interest rates, and putting big uh projects on hold?

[00:04:24]>> It looks that way. I think uh a declining market sounds great for affordability for but for developers, they do need to deliver stock to the marketplace at a premium price just given how expensive it is to build homes at the moment. So, falling prices certainly make that a lot harder, especially in markets like Sydney and Melbourne where the downturn looks a little bit more advanced.