The housing market in Australia is in a state of turmoil, with the Commonwealth Bank (CBA) slashing its forecasts and naming cities at risk of a dramatic downturn. The bank's latest analysis reveals a dire outlook for the property sector, with national home prices expected to plunge 9% peak-to-trough. Sydney and Melbourne are particularly vulnerable, facing a 13% and 12% drop, respectively. This comes as fresh housing data shows a steep decline in prices, with Sydney house values plummeting 4.6% in the first full quarter since the May budget, and a potential 18.4% annual crash looming. The situation is dire, with auction clearance rates dropping nationally, and only 233 of 683 listed homes selling in Sydney over the weekend, resulting in a clearance rate of just 34.1%. The Reserve Bank of Australia (RBA) is expected to raise the cash rate, further putting pressure on prices. Economists warn that the worst is far from over, with AMP estimating Australia is only about 35% of the way through the current downturn. Sydney continues to lead the pace of declines, with home values down 1.4% in August, 7.1% below peak levels recorded in February. The downturn is not confined to select markets or higher-value segments, as evidenced by the Cotality report, which showed every capital city except Darwin recording price declines over the past three months. The proportion of capital city suburbs recording a fall in home values more than doubled through winter, rising from 45.8% in autumn to 93%. The regional markets are also taking a hit, with the combined regional index down 0.4% in August, taking regional values 1.2% lower through winter. Brisbane, Perth, and Sydney have recorded the largest declines in transaction activity, with estimated sales volumes down more than 20% compared with a year ago. The auction clearance rate has fallen, with only 52.4% of properties sold via auction in the combined capital cities last week. Sydney's preliminary clearance rate has remained above 55% for four consecutive weeks, but the overall trend is downward. The market faces a subdued spring selling season as vendor confidence cools and borrowing constraints tighten, with only people who really need to sell putting their properties on the market. The RBA's interest rate hikes and the uncertainty around tax changes and interest rates are weighing on confidence, keeping some buyers on the sidelines. Despite the challenging environment, there are opportunities for specific buyer groups, particularly upgraders and first-home buyers, as prices fall and the market shifts. The regions are also suffering, with regional South Australia the only broad rest-of-state market to avoid a decline in values over the past three months. The housing downturn has been largely driven by declining demand, with home sales tracking 15.5% lower than at the same time last year and 11.5% below the five-year average. The softer trend in values is underpinned by weaker transaction activity, with sales volumes tracking well below both year-ago levels and the five-year average. As demand has weakened, homes are taking longer to sell, and listings have accumulated, with advertised supply tracking well above both year-ago and five-year average levels. The auction clearance rate has fallen, with only 52.4% of properties sold via auction in the combined capital cities last week. Sydney's preliminary clearance rate has remained above 55% for four consecutive weeks, but the overall trend is downward. The market faces a subdued spring selling season as vendor confidence cools and borrowing constraints tighten, with only people who really need to sell putting their properties on the market. The RBA's interest rate hikes and the uncertainty around tax changes and interest rates are weighing on confidence, keeping some buyers on the sidelines. Despite the challenging environment, there are opportunities for specific buyer groups, particularly upgraders and first-home buyers, as prices fall and the market shifts. The regions are also suffering, with regional South Australia the only broad rest-of-state market to avoid a decline in values over the past three months. The housing downturn has been largely driven by declining demand, with home sales tracking 15.5% lower than at the same time last year and 11.5% below the five-year average. The softer trend in values is underpinned by weaker transaction activity, with sales volumes tracking well below both year-ago levels and the five-year average. As demand has weakened, homes are taking longer to sell, and listings have accumulated, with advertised supply tracking well above both year-ago and five-year average levels. The auction clearance rate has fallen, with only 52.4% of properties sold via auction in the combined capital cities last week. The market faces a subdued spring selling season as vendor confidence cools and borrowing constraints tighten, with only people who really need to sell putting their properties on the market. The RBA's interest rate hikes and the uncertainty around tax changes and interest rates are weighing on confidence, keeping some buyers on the sidelines. Despite the challenging environment, there are opportunities for specific buyer groups, particularly upgraders and first-home buyers, as prices fall and the market shifts.
