Top end leads housing declines

Premium market declines

With oil prices up another 6½ per cent to $107 and interest rates looking sure to move higher, asset prices look set to take a hit.

It's tricky to know where to invest funds when home prices are falling and stock markets look a bit toppy. 

Brilliant work from Cotality below maps out the housing market downturn by capital city and price tier.

Higher valued houses in Sydney ($2 million plus) and Melbourne have already experienced declines of more than 10 per cent.

The top end of the market is thinner and illiquid, and tends to be more volatile, both in booms and busts. 

Lower valued properties and homes in other capital cities have seen only modest price corrections to date.

Source: Cotality

For what it's worth, Ray White reports that they're starting to see a turnaround in the premium sector of the market.

Sydney has already seen a large drop of new listings of almost -20 per cent versus the prior year.

Source: Cotality

Rents increased by 5.7 per cent over the year to August, taking gross rental yields up to the highest level since 2019. 

However, as mortgage rates increase, yields remain far too low for investors to become interested in the market under today's tax settings. 

Source: Cotality

You can download the full Cotality chart pack and commentary here. 

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Date centres boom

Data centres

Yeah...

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Consumer sentiment falls as rate hike looms

Sentiment turns down

The AFR reported this morning another major test looming for private credit after a Chinese developer defaulted on a $270 million loan, leaving a mega-development site in Sydney - long slated for 3,600 apartments near Olympic park - to be sold off, potentially at a significant loss. 

It all appears to be unravelling very fast in the sector, so watch this space.

The Westpac-MI consumer sentiment survey showed sentiment diving -5.2 per cent lower in September, back down to a reading of 84.4 this month, as consumers sense that interest rates are going higher again, partly fuelled by government spending. 

Source: Westpac, Melbourne Institute

For the housing market, the 'time to buy a dwelling' index pulled back accordingly, although it remains well off the cycle lows, while house price expectations also continued to decline.

Shane Oliver of AMP charted the trends:

Source: Shane Oliver, AMP

It'll likely be an interesting test for the Federal government over the next few months, given that various challenging tax reforms were pushed through, despite them not being touted in the election campaign. 

Popularity for Australian Prime Ministers generally tends to peak in the first 3 to 6 months of taking office - towards the end of the traditional honeymoon period - so it wouldn't necessarily a surprise to see Labor's primary vote polling ebbing somewhat as the PM is well into his 5th year in office. 

Over the past week or two, however, polling seems to have taken a nasty turn lower as the impacts of the Federal Budget and persistently high inflation begin to flow through. 

Roy Morgan saw Labor's primary vote as down to 27 per cent (-2.5), while Essential reported a 26 per cent (minus 5 percentage points) primary, and then yesterday YouGov also recorded a 26 per cent (-3) poll. 

As previously seen with 'The Voice' referendum, it can be devilishly tricky to arrest downtrends like this once they take hold.

Unfortunately for the government, economists from all 4 of the major banks are now calling for the Reserve Bank of Australia to hike interest rates for a fourth time in this cycle before the year is out, which will surely see polling take further hit if it eventuates.  

Source: ASX 

Previously I'd have guessed that populism wouldn't be such a strong bet in Australia, but after seeing the German landslide election result this week anything seems possible. 

It wouldn't be a surprise if the opposition parties run their 2028 campaigns on reversing the minimum 30 per cent rate for capital gains taxes, the minimum 30 per cent tax on discretionary trust distributions, and negative gearing being limited to new build homes only.

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And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

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By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

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Podcast: Why spring sellers may struggle: rate pressure, weak demand and a supply squeeze

Property Podcast

Podcast time!

Tune in here (or click on the image below):

You can also watch the YouTube version here:

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1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 20,000 followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Listings fall in August

New listings slump

Listings declined in Sydney and Melbourne August as vendors quickly lost confidence in the strength of the property market after the Federal Budget.

Total listings had been piling up until July, and remain significantly higher over the year across most capital city property markets. 

Asking prices as lead indicator

It's always interesting to take a look at SQM's asking prices indices as a potential leading indicator for what's to come. 

Generally speaking, the sharper 10-to-15 per cent price declines in this cycle to date have come mostly from the top price quartile of the market (and, so far anyway, much less so from the middle and bottom price quartiles). 

Looking at asking prices, houses in Sydney have been the most impacted property type in this cycle, as the most interest rate sensitive sub-sector of the market - particularly in the expensive Eastern Suburbs, for example, where the median asking price for a house sits above $3 million these days. 

Although there are some excitable forecasts annualising recent price declines - leading to forecasts for total median price declines for Sydney of close to 20 per cent - asking prices seem to have levelled out over the past month (and even increased a little over the past week).

Historically speaking, the steepest price declines have tended to occur mid-downturn as initially stubborn vendors capitulate to meet the market and accept lower prices.  

Now, to be fair, another interest rate hike or two might easily kick off further round of price declines as sentiment and borrowing capacity take a renewed hit. 

Unit prices in Sydney have generally underperformed since the 2018 overbuild, and as such haven't declined too much this year at all.

In Melbourne, asking prices for houses are now slightly higher over the past month, having initially corrected by about -5 per cent earlier in the year.

Meanwhile unit prices appear to be pushing for new highs, perhaps underpinned by the huge and ongoing increase in residential construction costs, as well as relatively attractive prices and higher rental yields in some cases. 

Nationally, asking prices have also been flat for the past month for houses, and have increased marginally for units. 

Source: SQM Research

Overall, it seems that some homebuyers are now prepared to pay for the right property, but investors have stepped out of the established housing market almost entirely for the time being.

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1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 20,000 followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

GDP growth was 0.4pc in Q2

GDP per capita stalls

Real GDP growth was a little stronger than expected at 0.4 per cent for the June 2026 quarter.

Annual growth slowed from 2½ per cent to 2.1 per cent - which apparently is about the level of the economy's potential, given poor levels of productivity.

Stripping out population growth, real GDP growth, per capita, was flat in the June quarter.

Investment looks fairly solid, largely related to equipment for data centres.

Nominal GDP growth continued to climb to new highs, as price pressures in the economy have refused to die just yet.

This has partly been due to the climbing share of government spending as a share of GDP, a chunk of which has related to the NDIS. 

The household saving ratio held up in the June quarter - but one suspects this was partly an artefact of cancelled travel plans for the Middle East (something which impacted me personally - was supposed to go to Jeddah for the Saudi Arabia Grand Prix, but had to abort!). 

Similarly household consumption growth held up at 0.4 per cent, as Aussies spent more at home instead, including on electric vehicles as the cost of fuel soared during the Iranian conflict.

Households will come under considerably more pressure over the remainder of 2026, as the cumulative impact of three interest rate hikes begins to bite in the form of more mortgage interest payable.

Finally, Australia's terms of trade fell -1.6 per cent, with further declines possible from these elevated levels. 

The wrap

The Treasurer has attempted to position the recent data flows as 'good news' as headline inflation was lower over the year to July, and and as workers' share of national income rose to the highest share in a decade. 

Unfortunately for that narrative, markets now expect a further interest rate hike (or perhaps two), and this is unlikely to poll too well for the government given the tough economic environment facing many households.

James Foster ran through the figures in more detail here.

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Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 20,000 followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

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Building approvals, solid in Bris & Perth

Approvals down

Building approvals fell -3.6 per cent to a seasonally adjusted 17,687 in July.

House approvals were solid in Perth and Brisbane, and pretty steady elsewhere.

The one bright spot for attached dwelling approvals remains south-east Queensland.

Sydney looks set for an acute housing shortage as this cycle progresses, especially given insolvencies in the development sector. 

Overall, this was a solid result, though whether all of the approvals turn into actual dwelling completions is a different story.

Over the past year, around 205,000 dwellings have been approved. 

Since the introduction of the Housing Accord, building approvals are running about 20 per cent below the government's implied target of 20,000 per month.

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In other news, Cotality reported housing prices as down by -0.9 per cent in August.

Source: Cotality

The largest declines have generally been seen in the higher price points, with houses in Sydney seeing a year-to-date decline of -7.7 per cent, and houses in Melbourne down -7.5 per cent.

Cotality reported that new listings are running -8.2 per cent below the 5-year average, with new listings in Sydney -14 per cent below average.

Rents continued to rise, up by 0.4 per cent over the month and by 5.7 per cent over the year to August (and 39 per cent over the past 5 years). 

You can read the full Cotality report here. 

---

1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 20,000 followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Is spring really a buyer’s market? Rents, listings and 40-year mortgages

False dawn?

Been staying the Cotswolds for a few days - very nice too, but good to be back on deck.

Here's what we discussed in the podcast this week:

"In this episode of Australian Property Podcast, Pete Wargent and Chris Bates unpack whether spring will bring genuine opportunity for buyers or just more noise in a fragile market. It is a practical check-in on prices, listings, rents and borrowing conditions heading into the busiest stretch of the year.

They look at why recent headlines about green shoots may be getting ahead of the data, what weak auction depth and softer sentiment are telling us, and why a true rebound may still depend on interest-rate relief rather than wishful thinking. The conversation also covers falling investor participation, why transaction volumes can drop harder than prices, and how the better properties in a suburb can hold up differently from the median numbers making the news.

Pete and Chris then dig into the policy side: negative gearing changes, rent pressure, slowing new-home sales, and the possibility that stretched supply gets even tighter if developers and investors keep stepping back. They also discuss sharper bank pricing, the early signs of a mortgage war, and why many borrowers should be reviewing their rate rather than waiting for the market to improve.

To finish, they answer listener questions on stamp duty, the real cost of trading property, and whether 40-year mortgages could become more common. That includes why longer loan terms may ease monthly repayments without fixing affordability, and how future schemes could change the way first home buyers enter the market."

Tune in here (or click on the image below):

You can also watch the YouTube version here:

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1. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog here. 

You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 20,000 followers. 

By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here. 

My book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here. 

4. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.