NSW slammed by housing settlement slowdown in slow spring: PEXA

The NSW property market has seen another heavy drop in sales volume and value, meaning Queensland again leads the nation for number of sales.

Australia’s property market has been slammed by a decline in sales settlements quarter-on-quarter with NSW hardest hit by heavy falls in both property sales volume and aggregate value, according to property exchange PEXA.

The move signals a further downturn in the market which had ridden a wave of strong momentum for more than two years.

Against the backdrop of rising interest rates and growing inflation, NSW recorded a 13 per cent quarter-on-quarter drop in residential sales settlements to 41,357.

Their value dropped even further by 16.8 per cent quarter-on-quarter to $47.7bn, showing the nation’s most populous state is seeing a faster market slowdown than any other region.

The falls will impact listed companies exposed to housing, including lenders and developers, as well as cutting government revenues.

In a trend first observed during the middle of the pandemic, Queensland’s property market has once again topped the nation for total volume for the quarter, recording 46,621 residential sale settlements, after being hit by a 10.9 per cent quarter-on-quarter dip. These were worth an aggregate $32.3bn, an 11.8 per cent quarter-on-quarter fall.

Victoria had a modest decline in both volume of residential property sales settlements with 44,255 recorded, showing an 11.8 per cent quarter-on-quarter rise, and residential aggregate value of $37.8bn being a 10.2 per cent quarter-on-quarter fall.

“The largest and fastest rate rises announced by the Reserve Bank of Australia since the mid-1990s are certainly starting to have an impact, with the Australian residential property market’s record run for the past few years well and truly over,” PEXA head of research Mike Gill said.

Queensland’s Surfers Paradise had maintained strong momentum over the past two years, PEXA said. Picture: Adam Head

“Although most states saw double digit declines for the quarter across both total volume and aggregate value of sale settlements, we must remember that we are coming off record high levels of activity,” he added.

Mr Gill said that despite the level of residential buyer trepidation, the commercial sector was holding.

“Although commercial settlement volumes were down in some states, the national commercial market performed relatively well in the September quarter, with Victoria posting an increase of 1.2 per cent in settlement volumes,” he said.

In a report PEXA said that outer metropolitan growth corridors such as Truganina and Marsden Park, both in Sydney, and Craigieburn, in Melbourne, were continuing to post strong residential sale settlement results. Queensland’s Surfers Paradise also continues its strong momentum seen over the past two years, it said.

Investment bank UBS warned this week that Sydney’s property market remains “highly overvalued” on a global basis, despite recent price falls. The bank warned that imbalances in city housing markets around the world were “highly elevated” with prices out of sync with rising interest rates.

Although the Australian market had seen a jump in house prices on the back of government stimulus during the pandemic, rate hikes are dragging the market back down to earth.

Research house PropTrack said that national home price falls steadied in September amid the spring selling season, with a national fall of 0.19 per cent for the month, the smallest drop since prices started to decline in April this year.

Sydney and Melbourne – which have been leading prices falls across the country – saw declines ease. House prices in Melbourne dropped below year-ago levels for the first time since 2019 after falling by 0.29 per cent and Sydney prices fell 0.18 per cent, PropTrack said.

The researcher has warned that the mix of interest rates moving sharply higher, higher mortgage rates and expectations of continued price falls are weighing on buyer demand and contributing to slower selling activity.