Australia’s housing market downturn has triggered a sharp contraction in home sales that threatens a vast commercial ecosystem built during the nation’s quarter-century property boom, according to a Reuters analysis published on Sept. 25. While property values have dipped only modestly since interest rates began climbing in February, transaction volumes have plummeted, directly impacting real estate agents, conveyancers, auctioneers, and furniture retailers.
Calculating the Cost of a Housing Turnover Slowdown
To measure the economic fallout of the cooling property market, Reuters calculated the commercial spending generated when an Australian sells a home, buys another, and moves. The assessment evaluated costs spanning agent commissions, listing preparations, settlement fees, moving expenses, and the purchase of new appliances and furniture. The baseline for the calculation used Australia’s median home price of A$1.11 million ($790,000) for a standard three-bedroom detached house.
State governments were excluded from the analysis despite collecting large stamp-duty revenues, because they operate outside the commercial sector. Commercial banks were similarly omitted, as their housing-related earnings stem primarily from mortgage repayments rather than transaction volumes. For goods and services, Reuters relied on mainstream advertised price ranges rather than outliers. Agent commissions, for instance, were evaluated at the standard 2% to 3% rate.
Weighting Universal Versus Optional Expenses
The analysis applied specific weightings to each expenditure based on the statistical likelihood of the expense occurring during a property transaction. Costs that remain nearly universal—such as agent commissions and conveyancing services settled on the software platform PEXA—received a 100% weighting.
Expenses less common to every sale received lower weightings. Pre-sale painting for a three-bedroom home typically costs between A$4,500 and A$10,000, but a 2023 Houzz survey cited by Reuters found that only a quarter of sellers undertake the work, resulting in a 25% weighting. Similarly, adjustments were made for the roughly 60-40 split between owner-occupiers and investors. Data from removalist website Muval showed that 39% of Australians purchase entertainment appliances when moving, but because only about 60% of property buyers are owner-occupiers, television purchases were weighted at 23%.
Impact on Housing-Dependent Industries
Businesses that depend on housing turnover fall into two primary categories. Dedicated operators—including real estate agents, property listing sites, furniture stagers, auctioneers, and building inspectors—earn their primary revenue when properties change hands. Meanwhile, removalists, painters, landscapers, renovators, and furniture retailers maintain exposure to sales activity while retaining secondary revenue streams elsewhere.
The analysis deliberately excluded the broader “wealth effect,” whereby consumers reduce spending due to falling home equity perceptions, focusing strictly on transaction-linked commerce. Byron Kaye and Stella Qiu reported the findings for Reuters, with editing by Shri Navaratnam.
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