Property market movements in Sydney and Melbourne are still highly dependent on interest rates, however, with all eyes on the Reserve Bank's decision-making over the next few months.
National housing market falls of between 15-20 per cent have been predicted based on interest rate forecasts, including from ANZ, which anticipates close to a 20 per cent drop before a modest recovery in 2024.
Australian home values fell by 1.3 per cent in July, according to the latest CoreLogic figures, led by Sydney and Melbourne, where values dropped by 2.2 per cent and 1.5 per cent respectively.
Domain economist Nicole Powell said the weakness showing up in the market followed a "phenomenal" rate of growth during the pandemic.
The major cities and the premium end of the market were leading the slowdown, Dr Powell told AAP, although the pullback in prices was starting to spread geographically.
"This is just the start of the downturn," she said.
Based on previous downturns in Sydney, she said a 15 per cent fall from the highest point to the lowest was possible.
CoreLogic's research director Tim Lawless also said Sydney and Melbourne markets had further to fall, based on previous downturns, with Sydney likely only about halfway through its downwards cycle.
Other capital city markets, such as Brisbane, Adelaide and Perth, had so far proven more resilient.
However, Mr Lawless told AAP these markets looked to be flattening out and would likely be in negative territory by the end of the year.
He also said the rate of decline was easing slightly in both Sydney and Melbourne, suggesting these markets had already seen their sharpest falls.
However, he said this was highly dependent on how high and fast the central bank planned to hike rates, with the most expensive housing markets typically the most sensitive to rate hikes.
Property economist Andrew Wilson said Sydney, in particular, could be approaching the bottom of its correction based on the latest data from My Housing Market.
He said Australia's robust economic performance compared to other countries meant it would see a shallower correction than previously expected.
Dr Wilson pointed to low unemployment rates, which appeared to be driving up wages, but only modestly.
While these wage hikes were not enough to counteract soaring inflation, he said modest wage growth had the benefit of not fuelling inflation and triggering more aggressive interest rate hikes.
"So all those factors would lead you to think that maybe this isn't going to be even as steep as some of those who have 20-30 per cent predictions," Dr Wilson told AAP.
He also pointed to the pick up in clearance rates in Sydney and Melbourne, which could also suggest a lift in market confidence.
10°C