The combination of high inflation, higher interest rates, weakening economic growth and softening consumer and business sentiment is starting to take its toll on the housing market.
That's according to the newly minted chief economist at property valuation and advisory firm, Herron Todd White, Cameron Kusher.
Noting the variance in the national economic performance, the weaker economic conditions over the quarter reflect weakening consumer and business confidence and the early impact of two increases in the cash rate over the quarter, Kusher says.
"Consumer sentiment, business confidence and business conditions are all sitting well below long-term average levels and highlighting increased pessimism. This is clearly weighing on residential property markets...," he says.
Looking ahead, the combination of high inflation, higher interest rates, weakening economic growth and softening consumer and business sentiment is starting to weigh on conditions.
High stock levels and low consumer confidence are contributing to the value declines being recorded in some states.
"Meanwhile, if the volume of properties for sale continues to climb elsewhere, which I would anticipate, then that is likely to be a precursor to a further slowing of housing market conditions," Kusher says.
He says that conditions are expected to slow over the coming months for those looking to sell.
Times are expected to also be tougher for renters.
"While housing value growth is slowing in most areas of the country, it's a different story when it comes to the rental market. Our ongoing high volume of population growth at a time when housing delivery remains low is creating more pressure on rents."
According to Kusher, this has resulted in an acceleration of rental growth since the middle of last year, with Cotality reporting that rents are 5.9 per cent higher over the past year.
Each capital city and rest of state market has also recorded increases in rents over the past year too.
Other property specialists agree that the market is undergoing a significant shift.
Paul Bloxham, chief economist HSBC says the market is weakening as house prices fall, which tends to weaken housing construction rates.
He adds that there is more uncertainty about the housing price forecasts given the tax system changes.
"Negative gearing has been a feature of the tax system for decades and the capital gains tax discount has been in place since 1999," Bloxham says.
"Removing these all at once has no recent historical precedent to help draw firm conclusions and may make this housing correction different to previous, often interest-rate driven, housing price cycles."
Meanwhile, Herron Todd White also points out that a seven-figure budget is now the baseline for a standard family home across much of the country, unpacking where it buys genuine value, and where the smart money is heading.
The firm's director Chris Hinchcliffe points out that outside of the capitals, $1 million may sound like a big number in many more remote regional centres, but analysis shows a mixed bag of some absolute bargain areas where a rock star house remains attainable, to towns where the secret is out and the money has already poured in.
The $1 million budget will get buyers into a townhouse in Illawarra, with village pockets like Balgownie popular.
Driving slightly south opens up the detached housing market, while areas such as Unanderra or further south in Warilla and the Shellharbour growth corridor, $1 million translates to an established three or four bedroom freestanding home on a generous block, often with scope for further renovation.
The outer fringes of Newcastle might get you into the property market with $1 million, while the Hunter Valley and Gillieston Heights are good options for buyers wanting to purchase in a regional area.
There are a broad range of opportunities for $1 million in Canberra. For detached housing, this will generally buy a renovated townhouse or duplex in sought-after inner south or inner north locations such as Narrabundah, Kambah or Monash.
A newer house and land-style product in parts of Whitlam, Taylor or Denman Prospect comes in under budget, though buyers may need to compromise on block size.
High-end apartments in the Parliamentary Triangle fringe, large executive townhouses and premium two-bedroom apartments in lifestyle precincts such as Kingston or Braddon are also available.
