Housing Market Facing Downturn, but Expected to Rebound Quickly, says Core Logic
In December, national house prices experienced a slight decrease of 0.1 percent, but over the course of the year, they still saw a rise of 4.9 percent.
The housing market in Australia is showing signs of slowing down after a prolonged period of growth, as indicated by property researcher CoreLogic.
According to the latest data from CoreLogic, the national housing index dropped by 0.1 percent in December following 21 months of growth that saw housing values increase by 14.3 percent.
Eliza Owen, Head of Research at CoreLogic, attributed this recent downturn to high home values and interest rates that were deterring buyers.
She pointed out that the decline in home values coincided with a seasonally slow period, during which value changes typically weaken.
CoreLogic anticipates that the current decline in housing values will likely be short-lived, with factors such as sellers holding back properties from the market contributing to a limited decrease in values.
The housing market may experience a minor downturn at the beginning of 2025, but CoreLogic suggests that the overall impact may be minimal.
Owen explained, “At the national level, home value declines are usually brief and modest compared to periods of growth…
‘Shallow and Short-Lived’ Downturn
Despite the recent decline, CoreLogic believes that various factors, including a scarcity of homes relative to the population and constraints on new housing construction, will contribute to a shallow and brief downturn in the housing market.
It may be challenging to see growth in housing values until the issue of affordability and loan serviceability is addressed.
Home Building Approvals Down
Recent data from the Australian Bureau of Statistics revealed a decrease in building approvals for residential properties in November.
While approvals for private sector houses dropped by 1.7 percent, the total number of dwellings approved remained 3.2 percent higher than in November 2023.
House Values by State
Property values in various Australian cities experienced fluctuations, with decreases in Sydney, Melbourne, Canberra, and Hobart, while prices rose in Brisbane, Adelaide, Perth, and Darwin, resulting in an overall 0.1 percent decline in property values for the month.
Looking at annual figures, house prices showed a 4.9 percent increase nationally in 2024, with significant variations across different cities.
In Darwin, house prices increased by 0.8 percent, while they saw a 2.3 percent increase in Sydney and a 6 percent increase in combined regional areas.
The median value of a home in Sydney is now close to $1.2 million, while it ranges from $774,093 in Melbourne to $813,016 in Perth.