00:02These figures today show that the housing market in Australia continues to weaken further.
00:08So for the month of June, we saw that house prices fell by 0.4% overall.
00:14And that's the biggest monthly fall since December of 2022.
00:20The pressure is still amongst the combined capital cities, particularly Sydney and Melbourne,
00:27where we've seen the sharpest falls.
00:30And if you look at the split there between the combined capital cities and regional Australia,
00:35what we're seeing is that the capitals saw a fall of 0.6%,
00:40whereas regional Australia continuing to hold up with prices rising by 0.3%.
00:47And on those capitals, I mean, as you said there, Sydney and Melbourne are leading that downturn.
00:52But capital cities such as Brisbane and Perth, they're still holding up.
00:56What's that divide there?
00:59Yeah, indeed.
01:00So we've continued to see this trend in recent months.
01:03So if we look at Sydney, for example, in the month of June, house prices fell by 1.2%
01:10and in Melbourne by 1%, whereas some of these other capital cities like Perth and Brisbane,
01:17they saw home prices rising or continuing to grow 0.7% and 0.3% respectively.
01:25But I think it's important to note that the pace of that growth has slowed significantly,
01:32keeping in mind that for some of these cities, we've seen a major run-up.
01:36So if you take, for example, Perth, it's been such a standout because from 2021,
01:43we've seen that basically that median house price has close to doubled there.
01:48Economists say that the divide really comes down to the fact that there is more supply
01:54in the two biggest cities.
01:57So when we look at cities like Perth or Brisbane, there's just less listings out there.
02:03And that is supporting prices because competition is still pretty intense.
02:07Now, what's behind the broader housing market slowdown?
02:10Yeah, indeed.
02:12So, Cotality make the point that it's not down to one factor.
02:17It's a perfect storm of factors.
02:19They also say that we started to see that the housing market was weakening
02:24even before the Reserve Bank of Australia began to hike interest rates back in February of this year.
02:31And that was because buyers were being hampered because of housing affordability challenges.
02:37But, of course, since then, we have seen that interest rates have arisen three times.
02:42We've also seen that consumer sentiment has virtually collapsed.
02:46And that hasn't been helped, of course, because of the war in Iran
02:50and the impact that that has had on oil prices as well as other input costs.
02:55Add on top of that the property tax changes,
02:58so the changes to the capital gains tax discount as well as negative gearing,
03:03which, of course, is focused on trying to get more first-home buyers into the market.
03:08And, Lyn, what are the predictions as to where the housing market goes from here?
03:13Most economists, Gemma, believe that the housing market will continue to soften in coming months.
03:20Cotality, which, of course, is the data provider behind these figures today,
03:24they believe that we will continue to see this pattern of softening in the months ahead,
03:30but we're not going to see a sharp correction.
03:33They believe that's because of some of the other factors, such as low housing supply,
03:38the fact that we have seen that the labour market is relatively tight,
03:43and also because of population growth.
03:45I do think that there's a couple of wild cards.
03:48One is certainly the Reserve Bank,
03:51because although it did hold interest rates steady last month,
03:56the Governor made crystal clear that the fight against inflation is not over,
04:01keeping in mind that core inflation is still rising,
04:04and it is still well above the Reserve Bank's target band of 2% to 3%.
04:09So that's something to watch there.
04:11And I think the other thing to watch is investor activity in the property market as well,
04:17because we have seen a pullback.
04:19A lot of investors sort of in that wait-and-see mode.
04:22But I think economists say, are we going to see perhaps that they might return to the market
04:27in the coming months, particularly when we think about new builds?
04:31Because, of course, investors still have the benefit of negative gearing,
04:35as well as the original capital gains tax discount for new builds.
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