The drop in buyer demand was first concentrated in Sydney and Melbourne but spread, Powell said. Demand softened in capital cities and regional areas over the winter and was below the three-year average in most markets for the 30 days to August 20.
Housing demand in Melbourne is now down 14.5% compared to a typical August, and 11% in Sydney and 17.8% in Brisbane. It fell more than 20 percent in Canberra and Perth.
Powell said demand had moderated as the higher cost of debt and inflationary pressures weighed on buyers’ ability to borrow. A greater supply of homes for sale had also reduced competition.
He added that Sydney’s previous spike reflected the city’s heightened affordability challenges and said the port city was further along in the price cycle.
Powell expected to see the seasonal increase in buyer demand that came with the spring, but felt interest would remain subdued, leading to increased opportunities for buyers.
“The opportunities are there, we have a general increase in inventories, more options on the market and the days on the market are getting longer, which means that buyers can come to the market knowing that they have more time to contemplate their purchases and take action. the right decision”. Powell said.
“For sellers, it’s a timely reminder that the market has moved on and it’s important to price their property right if they want to ensure a quick sale.”
St George Bank Chief Economist Besa Deda said the market downturn had started in the first half of 2021. Rapid price growth had led to increased affordability, and this was combined with rising mortgage rates. and an increase in the service margin of the interest rate, which affected the loans. power—had cooled buyer demand.
That slowdown was then accelerated by rising expectations of cash rate hikes earlier this year, Deda said, and the four consecutive rate hikes that followed. She expected demand to continue to weaken as rates rise.
“As long as you have that hardening [rate] If the cycle continues, home prices are going to go down, as will buyer demand, because affordability is affected by higher mortgage rates,” he said.
Buyer advocate Rich Harvey, chief executive of propertybuyer.com.au, said already cooling demand quickly dissipated as the cash rate rose.
“The result is that there are significantly fewer people at the auctions…much more before [to auction] offers accepted and significantly fewer people at open houses,” said Harvey.
“Last year we had 50 people passing through a home… I did some [this week] where there were three groups, in a weekend there could be five or six, or you could be lucky if you get 10”.
His team saw buyer demand fall first in Sydney, then in Melbourne and, more recently, in Brisbane. However, he noted that good quality properties were still selling well.
While the rate increases had an “immediate and detrimental” effect on buyers’ borrowing power, falls in property prices meant that some customers were now able to buy homes that were previously out of their budget.