Australia's housing market appears to be entering a downturn as rising interest rates soften buyer demand and create affordability pressures, according to property data firm Cotality. The tight supply conditions that have supported the national housing market in recent years are beginning to ease, with more vendors listing properties to avoid further price declines.

Sydney and Melbourne are already five months into the early phases of decline, while growth is slowing across mid-sized capital cities. Cotality research director Tim Lawless noted that listings are increasing as demand weakens, with interest rate rises creating serviceability challenges for potential buyers. Experts warn that a significant property price correction could coincide with a broader economic downturn and rising unemployment, suggesting the housing market's struggles may have wider economic implications across the Tasman.