Australia housing market faces difficult spring season amid falling prices

The Australian housing market faces a challenging spring sales season as buyer demand weakens and property prices undergo a correction. Data from Cotality indicates that auction clearance rates have struggled, with the national capital city preliminary rate recently falling to 48.9%, a significant drop compared to the 70% clearance rate recorded during the same period last year.

Price declines are accelerating across major cities, led by Sydney and Melbourne. The monthly decline across the five major capital cities has reached 1.2%, while the quarterly decline stands at 3.0%. Analysts suggest the market is currently a ‘buyers’ market’ due to high mortgage rates and significant overvaluation relative to incomes and rents.

Financial institutions are also expressing caution. National Australia Bank (NAB) projects a slowdown in mortgage market growth, forecasting an increase of only 2.5% for the year ending September 2025, down from 6.7% in the previous period. Experts warn that any unexpected shifts in inflation could further complicate the market by triggering speculation regarding interest rate changes.