Cooling Off: Australian Home Prices End 2024 with Monthly Decline

Image Credit: Reuters

Australia's home prices saw a slight dip in December, marking the first monthly decline in almost two years, as high mortgage rates strained affordability and more sellers entered the market after a long period of price growth.

Data from property consultant CoreLogic, released on Thursday, showed a 0.1% national drop in December compared to the previous month, with major capital cities experiencing a 0.2% decline. Sydney prices fell by 0.6%, and Melbourne lost 0.7%, while Brisbane, Perth, and Adelaide continued to see monthly price increases.

Tim Lawless, CoreLogic's research director, attributed the slowdown in housing value growth to affordability issues and a rise in housing supply.

Despite the decline in December, property values increased by 4.9% for 2024, adding approximately A$38,000 to the median home price, which now stands at A$1.2 million ($745,680) in Sydney.

The value of land and housing owned by households grew by A$851 billion to A$11.3 trillion in the year ending September, according to government data.

While the property market has defied expectations despite interest rates hitting 12-year highs in 2023, the Reserve Bank of Australia (RBA) recently signaled the possibility of a rate cut as soon as February. However, markets expect only a moderate easing, with rates dropping to around 3.60% by 2025.

Lawless noted that even with several rate cuts, it's unlikely that interest rates will return to the pre-pandemic average of 2.55%. As a result, lower rates are not expected to trigger a significant surge in property values.

A Reuters poll from November forecast home prices to rise by around 5% in both 2025 and 2026, driven by strong population growth and limited new supply.

 

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.