House price downturn deepens beyond falls in Sydney and Melbourne | The Business | ABC NEWS

Good morning and welcome here today, of course, to the auction at number 41.

It's a buyer's market across much of the nation.

We are selling, selling, hey, sold!Congratulations to our successful bidders.

This woman won over five other bidders to purchase this Melbourne home for just $18 ,000 above the reserve price.

And a congratulations.Well done.Well, now it's time for you to come on in.

Prices in this city are down 1 .6 % compared to five years ago.

The buyers are there, limited buyers.There's a bit of a hesitancy in the marketplace, especially with the borrowing capacity, but first home buyers are still bidding strong.

Across the country, about one in two homes are going under the hammer.Values fell 0 .7 % in July, the largest monthly decline since December 2022.But prices are still up 5 % over the year.The median home value is now just over $928 ,000.The biggest falls were seen in Sydney, Melbourne and Canberra.Brisbane, Adelaide and the regions also joined the downturn.

Perth and Hobart managed modest gains, while prices in Darwin slowed.

And really what's happening is that Melbourne and Sydney have been falling quite a lot.So if you look at the last six months and annualise it.Both Melbourne and Sydney are down about 10%.

The shift is really evident in the total stock available for sale in Brisbane.Going back to February, it was around 25 % below the five -year average.It's now sitting up around 6 % above that average level.So it's really moved very quickly.

Kotality's Gerard Berg says higher interest rates and government tax changes are pulling prices down.

It is continuing to have an effect because these policy shifts can take time for people to really process the change and consider what's happening.

Byron Dempsey's just sold one of his two investment properties in Sydney.So it's been a real tough market selling that property.

He says it took three months to sell.I wanted to get rid of it because of my own financial reasons.I was happy to just break even with what I paid for it in August this time last year, so about a year ago.And we ended up selling it for a bit of a loss.

Totality data shows that profits from sales hit a 20 -year high at the end of last year, with a median windfall of roughly $360 ,000.From here, property gains and losses depend, analysts say, on the direction of interest rates and whether homeowners stay in work.

That's the sort of point at which being able to service a mortgage going forward becomes so much harder and brings a lot more forced sales onto the market that then adds further downside pressure.

By the end of this year, total house prices will probably be flat relative to where they were in December last year.Sydney, Melbourne might recover a bit more, but I think the rest of Australia will come down to where Sydney and Melbourne essentially are now.

Independent economist Alan Oster says lower property prices could reduce spending in the economy as Australians feel poorer.

Because what happens is it makes people feel nervous, so you have a wealth effect.

Nervousness all round as the property market slump deepens.