Australia’s housing downturn is showing signs of a split personality, according to new data from Ray White Group.
Premium markets that recorded some of the largest price falls over the past year are beginning to stabilise, while demand is weakening across a number of more affordable, investor-heavy areas, Ray White Group chief economist Nerida Conisbee said.
National house values fell 3.3 per cent over the three months to August, led by Sydney and Melbourne, according to Cotality data cited by Nerida. But more recent indicators suggest the premium end is starting to turn.
Ray White tracks around 13,000 open homes each week. National attendance fell sharply through the first half of the year, from around 4.5 people per open in January to close to 2.0 by July.
Since then, the decline has stopped, with attendance edging back up to around 2.2 people per open.
Sydney is now averaging 2.3 attendees per open home, around 0.2 higher than immediately before the Federal Budget, while Melbourne, at 2.2, has recovered to roughly its pre-Budget level.
Over the past eight weeks, attendance has risen by 0.31 in Sydney and 0.17 in Melbourne. Brisbane, Adelaide and Perth remain well below their pre-Budget levels.
“Sydney is already showing a clear recovery in buyer engagement, while Melbourne increasingly looks as though it is moving from stabilisation towards an upswing,” Nerida said.
The suburb-level data shows where the shift is concentrated. Sydney’s Eastern Suburbs has added 0.8 attendees per open since the Budget, while Melbourne Inner South, North Sydney and Hornsby, and Melbourne Inner East are each up around 0.6 – all areas that experienced some of the largest price corrections over the past year.
At the same time, some of the largest falls in attendance are in more affordable markets: Adelaide South is down 2.9 attendees per open, Perth North West 2.4, Perth North East 1.7 and Cairns 1.4.
Nerida linked the divergence to changes in negative gearing and capital gains tax announced in the Federal Budget, which reduce the attractiveness of established housing to investors.
The effect is greatest in markets where investors represent a larger share of demand, she said.
Affordable areas initially held up better on price but are now losing buyers as investor activity retreats, while the larger price adjustment at the premium end is beginning to bring owner-occupiers back.
Pricing data is starting to reflect the same pattern. Premium Sydney markets that were still falling in July recorded some of the strongest monthly price growth in August, with Eastern Suburbs prices up 1.1 per cent, North Sydney and Hornsby up 1.0 per cent, and Ryde, Inner West and the Northern Beaches each up around 0.8 per cent.
Annual declines in those areas remain substantial, generally between 6 and 8 per cent, meaning it is an early shift rather than a full recovery. Nerida explained that Neoval does not cover Victoria, so the same pricing comparison cannot yet be made for Melbourne Inner South and Inner East.
“It remains a fragile recovery, particularly at the premium end where borrowing capacity is highly sensitive to interest rates, and a deterioration in the rate outlook could slow the momentum,” Nerida said.