The value of Australia's 11.5 million homes fell by $34.1 billion in the June quarter to $12.7 trillion, the Australian Bureau of Statistics said on Tuesday, the first quarterly fall since the September quarter of 2022. The mean dwelling price dropped $8,200 to $1,100,400. Thirty minutes before the ABS release, Westpac and the Melbourne Institute reported that consumer sentiment fell 5.2 per cent in September, with the sharpest drop among the people who own the homes losing value.
The fall was not evenly spread. Mean prices fell 2.4 per cent in New South Wales, 2.1 per cent in Victoria and 1.3 per cent in the ACT, and rose in every other state and territory. In dollar terms NSW lost $92.9 billion of dwelling value and Victoria $44.3 billion. NSW remains the most expensive market at a mean of $1,304,900. Queensland, at $1,130,600, and Western Australia, at $1,123,700, now both sit ahead of the ACT, South Australia and Victoria, where the mean is $918,400.
“The value of dwelling stock fell for the first time since the September quarter 2022," Dr Mish Tan, the ABS head of finance statistics, said. "The quarterly fall was driven by lower property prices, with the mean dwelling price falling by 0.7 per cent to $1.1 million. This is consistent with recent softening in housing market conditions." The stock is still 8.5 per cent more valuable than a year ago, and the number of dwellings grew by 54,400 in the quarter. The ABS also revised the March quarter down. It now shows growth of 1.7 per cent, not the 2.5 per cent first reported in June.”
Households own $12.18 trillion of the total, so the fall lands on owners rather than institutions, and Westpac's survey shows where it is being felt. Sentiment among homeowners, with or without a mortgage, fell 13 per cent in the month while renters' sentiment was flat. Among mortgage holders the index fell 14 per cent, and their assessment of whether it is a good time to buy a major household item fell 18 per cent. Sixty-four per cent of consumers now expect mortgage rates to rise over the next year, up from 59 per cent in August. Across the mortgage belt it is about 73 per cent.
The index fell to 84.4 from 88.9, well below its long-run average of 100.2. Westpac's head of Australian macro-forecasting, Matthew Hassan, wrote that "both fuel prices and interest rates again look to be driving the move. Local pump prices have lifted back above $2/litre for the first time since April, reflecting higher global energy prices and the end of the temporary halving in fuel excise tax." A stronger than expected July inflation reading, he wrote, "has stoked fears that the RBA will raise interest rates further in coming months".
The Reserve Bank held the cash rate at 4.35 per cent on 11 August and its Monetary Policy Board next meets on 28 and 29 September. The ABS's July consumer price index put headline inflation at 3.5 per cent and the trimmed mean at 3.6 per cent, with automotive fuel up 7.5 per cent in the month. Westpac's own view is that the board is unlikely to move on a single monthly reading. Cotality's index for August, released on 1 September, recorded a fifth consecutive monthly fall nationally, with Sydney 7.1 per cent below its February peak.
Not everyone reads the quarter as a turn. Forty-two per cent of Westpac's respondents still expect prices to rise over the next year and 32 per cent expect falls, expectations the bank describes as "notably firmer than during the last housing market downturn in 2022". HSBC's chief economist Paul Bloxham, who now forecasts a 13 per cent peak-to-trough fall, told the ABC that even that would leave prices about 30 per cent above pre-pandemic levels because so few homes have been built.
In Canberra, the day's housing argument was about One Nation's proposal to let renters and mortgage holders divert 3 per cent of their super contributions for three years, which Assistant Treasurer Daniel Mulino called "very irresponsible". Treasurer Jim Chalmers took questions on superannuation and a digital duty of care at a doorstop and was not asked about the ABS figures. Westpac notes that the next monthly inflation numbers arrive the day after the Reserve Bank board's meeting ends, which is the order in which owners will find out whether the fall has further to run.
