Australia's Sydney Housing Market Decline Accelerates

Sydney home prices fell 1.2% month‑over‑month in June, the steepest slide since the 2008 financial crisis, while Melbourne saw an 0.8% decline over the same period. Analysts link the drops to the federal budget’s proposed property‑tax reforms, three interest‑rate hikes this year and high household debt levels – about 190% of disposable income in Australia.

Dr. Sarah O’Connor of CoreLogic noted that “the Australian market is leading the charge because it was the most leveraged housing market in the developed world.” Tim Lawless of Cotality added that “the pace of the housing slowdown has picked up in the last four weeks.”

Economists warn the correction could spill over to New Zealand, Canada and the United States if mortgage defaults rise, and suggest the Reserve Bank of Australia may need to consider rate cuts to avoid a broader credit crunch.