AUSTRALIA / RankWire.AI / – Australia’s property sector experienced a $34.1 billion decline in value during the June quarter as housing prices weakened following years of robust growth. The total value of the nation’s dwelling stock dropped 0.3% to $12.689 trillion. This marked the first quarter-over-quarter decrease since September 2022. A forecast published this month predicts a 10% peak-to-trough decline in home prices, which, when applied to the current national property value, translates to approximately $1.3 trillion in wealth reduction, emphasizing the extent of assets tied up in Australian real estate.
According to the Australian Bureau of Statistics, households held $12.183 trillion worth of residential properties at the end of June. The country’s housing stock comprised 11.531 million dwellings, an increase of 54,400 over the quarter. Despite the rise in quantity, the average dwelling price fell by $8,200 to $1.1004 million. This quarterly decrease signifies a shift from the strong national growth experienced in recent years. Even with this decline, the total value of Australia’s housing assets remains 8.5% higher than it was a year prior.
The greatest decrease in home values occurred in New South Wales, where a reduction of $92.9 billion was recorded during the quarter. Victoria saw a decline of $44.3 billion, while the Australian Capital Territory experienced a drop of $1.4 billion. In contrast, residential values increased in all other states and territories. The average dwelling price also declined in New South Wales, Victoria, and the ACT, with New South Wales maintaining the highest average at $1.305 million, followed by Queensland at $1.131 million.
Rising borrowing costs contribute to falling home prices
Data from recent months indicate that the housing market slowdown persisted after the June quarter. In August, national average home prices dropped 0.9%, marking the continuation of a five-month trend of monthly decreases. Shane Oliver, chief economist at AMP, noted that prices had fallen 3.6% from their peak by the end of August. His outlook projects a roughly 10% decline from peak to trough on a national level. Applying this percentage to the estimated $12.7 trillion worth of residential properties results in an approximate loss of $1.3 trillion in value.
The housing slowdown has been accompanied by increasing borrowing costs. The Reserve Bank of Australia has raised the cash rate three times in 2026, bringing it to 4.35%. These hikes total 75 basis points. Financial institutions have passed these higher rates onto mortgage and savings products. Consequently, scheduled mortgage payments now approach their 2024 peak relative to household disposable income. The Reserve Bank’s August review also indicated that nationwide housing prices are 1.6% below their March peak.
Sydney and Melbourne lead the decline in property values
Among the major markets, Sydney and Melbourne have experienced the most significant recent drops in housing prices. Auction clearance rates have also fallen below their long-term averages. Although price declines are increasingly widespread across Australia, regional differences remain substantial. Brisbane and Adelaide have shown some weakness in the latest central bank assessments, while Perth and regional areas continue to record modest gains, albeit at a slower pace. These regional disparities have resulted in a national housing downturn that varies considerably from market to market.
Recent figures also highlight that the current decline comes after a much larger rise in Australian property values since the pandemic began. As of August, national housing prices remained approximately 5% higher than a year earlier. They are also roughly 50% above levels recorded at the start of the pandemic. The official dwelling stock data for the September quarter will be released on December 1. Until then, the latest national figure still reflects the $34.1 billion decline observed in the June quarter.