As parts of the United States face a sharp housing correction, comparisons are being drawn to other high-growth markets such as Australia. In both countries, property prices rose sharply during the pandemic, but their trajectories have since diverged.
In the US, cities like Miami and Austin are now reporting double-digit declines in median house prices since their 2022 peaks. Meanwhile, Australia’s housing values continue to rise, prompting analysts to question whether a similar downturn could occur there.
Distinct Supply Conditions Driving Divergent Outcomes
House prices in 19 of the 50 largest US metro areas have now fallen below July 2022 levels, according to new data cited by news.com.au. Cities in the West and South, including Miami (–19%) and Austin (–15%), have led the decline. Analysts attribute the trend largely to a supply-driven correction, exacerbated by rising mortgage rates and a growing inventory of homes on the market.
“The US market is faltering because many cities are seeing more homes come to market just as high mortgage rates bite, so prices are softening,” said Michael Yardney, founder of Metropole Property Strategists. “If US homeowners want to sell, they have to meet buyers where they are, which often means lowering prices.”
During the pandemic, many US states with relaxed planning regulations experienced a building boom, which added significantly to housing stock. For example, cities like Denver and Austin expanded housing supply rapidly to accommodate incoming residents. This oversupply has since pressured prices downward.
By contrast, New York and Los Angeles have bucked the trend, with home prices rising by 16% and 18% respectively since 2022—highlighting the regional variation within the broader US market.
Structural Differences Shield Australian Market
Analysts suggest Australia is unlikely to experience a similar correction due to chronic undersupply, sustained population growth and strong policy support for buyers. According to Mr Yardney, “We don’t have enough properties to meet demand. We’re experiencing record population growth, falling interest rates, rising buyer and seller confidence and government incentives that will pull forward first homebuyer demand, all against a backdrop of chronic undersupply.”
Australia’s construction sector remains constrained, with new dwelling approvals at decade lows. Elevated building costs and reduced project viability have led many developers to delay or abandon projects. At the same time, immigration-fuelled demand continues to grow, creating a sustained imbalance between supply and demand.
Recent government measures, including the 5% deposit scheme for first homebuyers, are expected to further stimulate demand. Though Treasury estimates suggest this will raise prices by only 0.5% over six years, some economists remain cautious about long-term affordability.
In contrast, New Zealand’s market—once similarly heated—has cooled significantly. A combination of relaxed zoning laws, tax changes, and a foreign buyer ban has pushed prices downward. But Australia’s market conditions, for now, remain notably different.
