The British newspaper "The Guardian" said that the cycle of raising interest rates by the Reserve Bank of Australia caused the largest decline in the housing market in more than four decades.
The decline of 8.4% between May 2022 and January 2023 is the deepest decline compared to the lowest recorded level dating back to 1980.
The newspaper pointed out that it exceeds the previous record decline between 2017 and 2019, as well as the downturn caused by the global financial crisis of 2007-2008.
Sydney house values have led this latest decline, down 13% from their highest point.
Brisbane prices fell by 10% while Melbourne housing prices fell by 8.6%.
Higher household indebtedness may have increased the sensitivity of the housing market to interest rates, said Elisa Owen, chief research officer at CoreLogic.
"Higher inflationary pressures, along with increased post-lockdown spending, have also eroded household savings, which could have been used for a home loan deposit," she added.
She explained that the market may also suffer from “hangovers” from higher sales and activity in 2021, which left a vacuum in demand.
And the newspaper considered that it is unlikely that the market has reached its lowest levels, as it is likely that the increase in cash prices from 3.1% will continue to push prices down in 2023.
"Continued increases in interest rates will further erode borrowing capacity, potentially prolonging the nation's housing downturn until interest rates stabilize," Owen said.
Weak property prices and rising construction costs continue to weigh on new construction projects, with housing approvals falling 9% in November.
Building approvals, the leading indicator of future activity in the construction industry, have fallen 21.7% since August.
The decline in November was led by the more volatile private housing sector which fell 22.7%. Approvals for private homes fell 2.5%.