Australia’s collapsing real estate prices have delivered a massive hit to the economy, wiping billions from the residential real estate market in the span of three months.
Alarming ABS figures released today showed the value of the residential housing market shrank by $34.1 billion over the June quarter, dragging the total value of the market down to $12.68 trillion
It was the first time in four years that the total value of the market contracted, according to ABS head of finance statistics Dr Mish Tan.
“This is consistent with recent softening in housing market conditions,” Dr Tan said, noting home prices dropped by an average of 0.7 per cent nationally over the period.
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![Leichhardt auction](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1280 720"%3E%3C/svg%3E)
Auction clearance rates have tanked in recent weeks as home prices fall. Picture: Jane Dempster
Prices fell the fastest in NSW, with an average drop of 2.4 per cent, which skimmed about $32,700 off the state median dwelling price.
Notable drops were also recorded in Victoria at 2.1 per cent and the ACT, where values declined by an average of 1.3 per cent.
Analysis by Primara Research, modelled off ANZ property predictions, showed the housing market could cost the economy significantly more as it picks up pace.
The total value of the housing market has dropped.
Research measured what recent ANZ predictions of a 10.6 per cent fall in national property prices over the next two years would cost the economy, indicating it would make the country poorer.
Australian households were forecast to lose a total $527.5 billion in 2026 alone.
It was noted that close to 57 per cent of the country’s household wealth was tied up in residential property, making housing market downturns a significant strain on the economy.
NSW represents about 40 per cent of the nation’s housing market and is expected to have the largest falls in prices, with ANZ forecasting a 14.5 per cent average drop in Sydney values over the next two years.
Economists said Albanese and Jim Chalmers reforms announced in the May budget have contributed to price falls. Picture: Hilary Wardhaugh
This would result in a $653.2 billion reduction in NSW household property wealth, from $4.5 trillion at the start of 2026 to $3.85 trillion by the end of 2027, the Primara modelling done for HomeLoanRates.com.au showed.
ANZ forecast Melbourne prices would fall by an average of 12.8 per cent over the two years, which would erode Victorian households’ wealth by $357.6 billion.
REA Group economist Eleanor Creagh said home prices were falling due to a mix of interest rate hikes and tax changes announced in the budget – including restrictions on negative gearing.