Welcome to this week’s edition of Property Edge, your go-to for the latest insights shaping the Australian property market. Whether you’re a seasoned investor or just starting out, we’ve got the trends, data, and tips you need to stay ahead in this ever-evolving landscape.

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Expected Interest Rate Cuts Now Unlikely

Australia’s job market surged in August, with recent employment figures exceeding forecasts and reinforcing the expectation that the Reserve Bank of Australia (RBA) will keep interest rates unchanged for the remainder of the year. Despite global rate cuts, including a significant move by the US Federal Reserve of a 0.5% cut, Australia’s economic stability seems set to keep rate reductions at bay.

The latest data has revealed that 47,000 new jobs were added to the economy in August, almost double the predicted 26,000 increase. The strong labour force participation rate helped keep the unemployment rate steady at a record 4.2%, a sign of resilience in the job market.

Why This Matters | RBA Governor Michele Bullock has pointed to the strength of the labour market as a key reason for holding the cash rate at 4.35%. Even as other central banks, such as the US Federal Reserve, are cutting rates to stimulate their economies, Australia’s steady employment numbers offer little incentive for the RBA to follow suit.

The Global Context | While the US Federal Reserve cut rates by 0.5 percentage points, bringing their target range to 4.75%-5%, Australia’s financial markets have reacted differently. The Australian sharemarket hit a new record for the fourth day running, buoyed by the expectation that the RBA will not be lowering rates any time soon.

Government Perspective | Prime Minister Anthony Albanese, speaking before the latest jobs data was released, tempered any hopes for a rate cut similar to the US. “The US faced higher inflation and a higher peak in interest rates. They’re reducing from a much higher level than we are.”

What’s Ahead | While some market analysts predict a possible rate reduction to 4.1% by the end of the year, most economists have agreed that the RBA is unlikely to move in that direction in the foreseeable future.

The Suburbs Where Vendors are Selling At A Loss

Australian property sellers continued to make gains in the June quarter, with 94.5% of property resales turning a profit. This represents a slight increase from the 94.4% recorded in the previous quarter, according to CoreLogic’s latest Pain and Gain report. However, sellers in certain high-density areas have been hit harder, with a significant number of properties selling at a loss.

In particular, apartment-heavy suburbs have seen a larger share of loss-making sales, as an oversupply of homes has given buyers more choices. In suburbs like Parramatta, where nearly 26% of property sales resulted in losses, the risk is pronounced. Ryde and Strathfield also experienced notable losses, with 21.5% and 19.2% of properties respectively selling below the purchase price.

Eliza Owen, CoreLogic’s head of Australian research, noted that while overall market profitability has improved slightly, it may peak soon as the property market begins to soften this spring. Increased housing supply, coupled with economic pressures such as rising interest rates, higher living costs, and low consumer sentiment, are expected to challenge sellers in the coming months.

Houses generally fared better than units, with 97.2% of house sales turning a profit compared to 89.4% of unit sales. Melbourne saw the highest proportion of loss-making sales outside the Northern Territory, with 9.5% of sellers losing money, an increase for the second consecutive quarter.

Sydney’s overall profitability has increased, but some areas are struggling. Sellers in Parramatta, in particular, are facing losses, many of whom purchased during the off-the-plan apartment boom in the mid-2010s. The median hold period for loss-making sales in the area was eight years. In contrast, Brisbane saw just 0.9% of sales at a loss as the city’s property market continued to rise.

In Melbourne’s apartment-dense areas, the trend of loss-making sales was more pronounced, with 39% of properties in the City of Melbourne selling at a loss, alongside 25.8% in Stonnington and 21.6% in Port Phillip. These areas have experienced years of new development, particularly for investors, which has outpaced demand.

Owen pointed out that Melbourne’s home values have been declining for six consecutive months, leading to an increasingly entrenched downturn as more people look to sell during the busy spring period.

The report also noted a decline in “fast flips,” with more homeowners selling properties within two years or less. While this trend had been on the rise due to mortgage costs increasing from historically low levels, the share of two-year flips dropped to 7% in June, down from 8.5% the previous year.

In regional areas, tree-change destinations that saw a boom during the remote working era are now experiencing mixed results. In Ballarat, 6.5% of property sellers made a loss, with a median hold period of just over two years.

PRD chief economist Diaswati Mardiasmo highlighted that an increase in apartment developments has boosted supply, but has also put downward pressure on growth. While this extra supply has improved housing affordability to some extent, homebuyers are still taking on large mortgages. Even with potential savings on a property sold at a loss, the reduction in the overall mortgage burden is likely to be modest.

As sellers continue to navigate a changing property landscape, expectations around profitability and affordability will need to adjust. While the market remains profitable for many, the pressure is growing in high-density areas where supply outstrips demand.

Source: CoreLogic Pain and Gain Report, June quarter

The Suburbs Where Prices are Falling

New data reveals that residential property values have dropped in nearly 30% of Australian suburbs in the three months to August, with Melbourne seeing the most widespread declines. CoreLogic’s latest report highlights the growing number of areas experiencing price drops as interest rates, living costs, and affordability challenges weigh heavily on the market.

In a study of 3,655 suburbs, CoreLogic found house prices fell in 29.2% of locations across the country, up from 17.2% in the same period last year. According to CoreLogic economist Kaitlyn Ezzy, “While values are still rising nationally, the pace is slowing, and we’re starting to see some weakness, particularly in Victoria.”

Melbourne Leads the Decline

Melbourne has been hit the hardest, with property values declining in almost 80% of the suburbs analysed. Areas like Crib Point on the Mornington Peninsula and Caulfield East in the inner south saw some of the sharpest drops, with house prices falling by nearly 7% and 6% respectively. Crib Point’s median house price, once around 750,000, dropped by over 50,000.

Ezzy attributed the Melbourne downturn to increased supply. “Advertised listings in Melbourne are about 30% higher than the five-year average for this time of year,” she said, adding that new housing stock is contributing to an oversupply that’s pushing prices down. The trend is particularly evident in more affluent areas, where all Mornington Peninsula suburbs saw declines, while few saw rises in inner-south and inner-east areas like Carrum, Box Hill, and Canterbury.

Regional Victoria has also been affected, with Ballarat, Geelong, and Bendigo seeing the highest concentration of price drops.

Sydney Sees Supply-Driven Price Drops

Sydney hasn’t escaped the trend either, with house prices falling in nearly 26% of its suburbs. The inner-west suburb of Rodd Point experienced the steepest decline, with prices falling 8.1%, driving down the median house price by almost 300,000. Concord followed, with its median house price dropping by over 150,000.

Ezzy noted that Sydney’s price drops are also supply-driven. “Supply levels have normalised across the city, giving buyers more choice and negotiating power,” she said. This shift has eased the pressure that previously fueled price rises, leading to more suburbs recording declines.

Perth Bucking the Trend

In contrast, Perth has shown remarkable strength, with house prices rising in every suburb analysed. Of the 146 regional WA suburbs surveyed, 127 recorded price increases, while all 302 Perth suburbs saw growth. Ezzy called it “a remarkable turnaround,” noting that 60% of Perth suburbs were in decline in 2022, but none have seen price falls this year.

Perth’s values increased by as much as 10.6% in Henley Brook, while even the more modest gains in suburbs like Marmion still recorded rises of 1.8%. Perth’s shortfall in listings—around 43% below the average—combined with strong interstate migration and favourable economic conditions, has kept the upward pressure on property values.

Consumer Confidence Volatile Over Property Market Concerns

Despite a slight uptick, Australian consumer confidence remains mired in historically low levels, reflecting ongoing uncertainty in the property market and broader economy. The latest ANZ-Roy Morgan Consumer Confidence index showed a modest 1.8-point rise to 84.1, marking an eight-week high. However, the bigger picture reveals a more concerning trend: consumer confidence has now spent a record 85 consecutive weeks below the critical threshold of 85.

Although consumer confidence is up 4.3 points from the same week last year and sits slightly above the 2024 weekly average of 82.0, the property market and economic outlook remain clouded by a mix of financial pressures and diverging sentiment across states and homeowner categories.

Property Owners vs. Renters: A Diverging Sentiment

One of the key takeaways from this week’s data is the shifting sentiment across different housing cohorts. While consumer confidence has marginally improved for homeowners who own their properties outright, renters and mortgage holders are less optimistic. Homeowners without a mortgage saw their confidence rise by 1.7 points, whereas confidence among renters fell by 1.3 points, and those with mortgages saw only a slight dip of 0.2 points.

This divergence reflects the pressures facing different segments of the housing market. Homeowners with paid-off properties may feel more insulated from rising interest rates and cost-of-living challenges, while renters and those with mortgages continue to bear the brunt of financial strain.

Financial Pressures Still Loom Large

On a broader level, current financial conditions remain a source of concern for many Australians. Over a fifth of Australians (22%) reported being better off financially than this time last year, but nearly half (48%) said they were worse off—a clear indicator of the economic pressures that persist despite marginal gains in confidence.

Looking ahead, Australians are cautiously optimistic about their financial future, with a third (33%) expecting to be better off a year from now, a slight increase from last week. However, economic uncertainty continues to cast a shadow, as only 9% of respondents believe the Australian economy will experience “good times” over the next 12 months, while 32% expect “bad times.”

Property Market Implications

The continued weakness in consumer confidence is likely to have ripple effects in the property market, where buyer hesitation and fluctuating demand are becoming more evident. With fewer Australians feeling confident in their short-term financial outlook, this could temper activity in the housing market, especially among first-home buyers and those looking to upsize.

That wraps up this week’s edition of Property Edge. Stay informed, stay ahead, and as always, take action on the opportunities the property market presents. See you next week with more updates and insights!

Warm regards,

Property Lovers Team

Reminder … Expires Tonight!

We’ve been thrilled by your amazing response, but time is running out! If you want to flip property for cashflow using potentially little to none of your own money, using the latest AI technology along with hands-on support and accountability, now’s your opportunity. Join us at a staggering 70% off our usual price (closing tonight) – this deal won’t come around again!

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PS This is not a course, it is step-by-step system that combines knowledge, technology, community, and support that have propelled our students to 6 and 7-figure profits.