Housing Minister Clare O'Neil has said she wants to see house prices change after new figures showed median values dropping in every Australian capital city over the September quarter — the first time that has happened in 15 years, according to Nine.com.au.
The Domain House Price Report, cited in the reporting, found the median house price fell 4.7 per cent, a drop of $59,970, across the capitals, with some cities losing close to $89,000.
Asked about the numbers, O'Neil said she did want movement in the market. "I do want it to change. We need house price growth slow," she said, per Nine.com.au.
Why it matters
Australian politicians have generally steered clear of welcoming weaker property values, because roughly two-thirds of Australians own their home, including 35 per cent who are still paying off a mortgage. A minister saying publicly that she wants prices to shift therefore carries political weight.
O'Neil framed the issue as a long-term problem rather than a short-term dip. She said that across a 25-year span, Australian house prices had risen by 400 per cent, and that the consequences of that run for the country were predictable.
Where the falls were sharpest
Perth recorded the biggest decline of the capitals, at about $88,600, followed by Sydney at $82,400 and Brisbane at $66,000, according to the report.
Sydney's median house price fell to $1.66 million, SMH.com.au reported, describing the downturn as having broadened.
Domain's chief of research and economics, Nicola Powell, said the size of the falls pointed to a deterioration in conditions that was difficult to dismiss. She noted that the cities posting the largest drops had been among the strongest performers in the previous growth cycle, and that affordability limits and weaker sentiment had now caught up with them, producing some of the largest quarterly declines on record.
The federal government's May changes to property tax benefits are partly blamed for the slide, with investors seen as less motivated to bid at auction.
Official figures reflect the shift. The Australian Bureau of Statistics recorded the total value of homes falling by $34.1 billion between the March quarter and the June quarter, to $12.9 billion, as reported.
A correction, and a political argument
O'Neil described falling prices as a market "correction" in June, which prompted debate over whether the government was deliberately trying to push home values down. Treasurer Jim Chalmers later walked back her remarks, saying she had been referring to a general situation in which prices had softened somewhat.
Falling values also raise the prospect of more homeowners slipping into negative equity, where a property is worth less than the loan secured against it. Reserve Bank of Australia data from May showed such cases remained historically low, below 1 per cent.
At the same time, the cost of servicing a mortgage has climbed after four interest rate increases this year.
Reserve Bank deputy governor Andrew Hauser said on Wednesday that the inflation outlook was "materially worse" than previously projected, raising the chance of a further increase in November. He set out the board's dilemma: whether to act more forcefully against inflation while accepting weaker activity and a softer labour market, or to hold back to shield employment while risking inflation becoming more entrenched and costlier to bring down.
What to watch next is the Reserve Bank's November decision, and whether the price declines spread further or level off as borrowing costs stay high.
