Australia housing market faces slowdown as affordability limits are reached

The Australian housing market is experiencing a slowdown in both sales listings and rental growth as tenants and buyers hit affordability ceilings. REA Group reported a 16 per cent drop in listings for Sydney and Melbourne over the last three months, while Brisbane, Perth, and Adelaide saw increases of 17 per cent.

Rental growth has slowed significantly, with national dwelling rents rising only 0.5 per cent in the September quarter. Experts from Cotality and Domain suggest that while vacancy rates remain low, renters are reaching the limits of what they can afford due to high living costs and interest rate pressures. In Sydney, house rents saw a slight quarterly decrease, while unit rents reached record highs.

Economists from Commonwealth Bank and REA Group predict that house prices may continue to fall in the coming months, driven by higher borrowing costs and recent tax changes regarding negative gearing and capital gains. However, they noted that resilient employment and homeowner equity may provide a floor for future price declines.