- 02 Dec 2024
- By API Magazine
National property prices are now almost flatlining, with the pace of growth slowing in the strongest markets and going backwards in Sydney and Melbourne.
The property boom that has been underway in Australia for two years is all but over.
In the weakest result since January 2023, dwelling values on a national basis eked out a 0.1 per cent gain in November.
The latest CoreLogic Home Value Index (HVI) reaffirmed the downward trend in property prices around the country.
The three cities that have been the powerhouse of capital growth – Perth, Adelaide and Brisbane – are still generating reasonably strong price growth but momentum is subsiding.
The country’s two biggest markets, Sydney and Melbourne, are now settling firmly into a slow price decline, with Hobart also sliding in the past month.
(Source: CoreLogic)
Perth’s pace of capital gain continues to lead the nation, with values up 1.1 per cent over the month and 3.0 per cent higher over the rolling quarter, however, this was the softest rise over a rolling three-month period since April 2023 and is less than half the rate of growth recorded through the June quarter (6.7 per cent).
Similarly, Brisbane’s quarterly rate of growth has eased back to 1.8 per cent, the slowest pace of gains since March 2023, while Adelaide’s 2.8 per cent rise in values over the past three months was the smallest outcome since June 2023.
Buyers who were holding out for an interest rate cut have seemingly put the wallets and purses aside as the prospects of an imminent cut to the official cash rate recede.
That was underlined on Friday (29 November) when ANZ become the third of the four big banks to push their expectations of a rate cut back from February to May 2025.
A rate cut in early 2025 would likely reignite property prices and drive affordability further out of reach of many but the current downward pressure on prices now appears to have little opposition even in the face of limited housing supply.
The money that had been pouring into the property market is now being squirreled away.
Household deposits hit another record high in October, according to RateCity.com.au data released Friday, with Australians saving an extra 19.5 billion in that month alone.
The correlation between interest rates and savings, and by extension its effect on property price pressure, has been made clear over the past couple of years. Household bank deposits have now risen by $272.6 billion since the start of the rate hikes (April 2022 to October 2024 inclusive).
Listings on the rise
Buyers are now enjoying more choice, with listings on the rise around the country.
Capital city unit and house listings are up 16 per cent since the end of winter, with Perth (33 per cent) and Adelaide (25 per cent) recording the largest lift in advertised stock levels through the spring season, albeit from an extremely low base, with total listings remaining well below average in these cities.
Sydney and Melbourne listings are now tracking 10.4 per cent and 9.1 per cent above their previous respective five-year averages, to be at their highest level for this time of the year since 2018.
Median selling times are also trending higher for private treaty sales.
Regional property has reinforced its outperformance of the capitals in the latest HVI.
Outside of the capitals, regional housing trends have been a little stronger, with the combined regional index rising 1.1 per cent over the past three months compared with a 0.3 per cent lift across the combined capitals.
As with the capital city trends, there is significant diversity, with regional Victoria weighing on the headline numbers, down 0.9 per cent over the rolling quarter, while every other ‘rest of state’ region continued to record a mild rise, led by regional WA up 3.3 per cent.
Real estate prices still have some factors preventing a more rapid deceleration.
Tim Lawless, CoreLogic’s Research Director, said an undersupply of newly built housing is likely to provide some support for housing values.
“Although population growth is expected to ease further in 2025, a cumulative undersupply of housing has accrued across Australia following the record levels of population growth since international borders re-opened.”
The unemployment rate has levelled out in the early 4 per cent range over the past seven months, with participation in the workforce holding around record highs and under-employment trending lower.
“While strong labour markets are a welcome outcome for most Australians, the risk in a tight jobs market could keep additional upward pressure on wages that could in turn fuel consumer spending, supporting higher housing prices.
International buyers have more to spend
Australian buyers are now also looking for bargains.
The fastest growing property markets have predominantly been driven by hot demand in the outer suburbs and findings released Friday support the perception this is set to continue.
The most common maximum price for Australian searchers when looking to buy on realestate.com.au is $600,000.
International buyers looking to Australia seemingly have their eyes on a pricier prize, in part due to Australia’s low dollar valuation.
The most searched top price band for overseas searchers is $1 million, according to PropTrack, which is reflective of the suburbs that get the most search activity from overseas.
Some of the cities frequently searched have more moderate prices, such as Brisbane, Perth, and Adelaide; however, suburbs such as Brighton, South Yarra, and Camberwell, all in Melbourne, which are popular with overseas buyers, are all in the pricier range.
This trend is similar for overseas property seekers looking to rent. Aside from the major CBDs, renters are interested in South Yarra, Bondi, and Manly, to name a few.
Of the countries with the largest search numbers, searchers from India have a smaller budget, mostly searching for properties below $600,000.
This is reflective of many of the suburbs they search for, preferring new development suburbs such as Tarneit and Point Cook, which have reasonably priced new homes for sale.
