Key takeaways
CoreLogic’s Home Value Index (HVI) ended the year on a negative note, with values down -0.1% nationally over the month after peaking in October and holding flat in November.
In annual terms, Australian home values were up 4.9% in 2024, adding approximately $38,000 to the median value of a home.
Growth in housing values has been consistently weakening through the second half of the year, as affordability constraints weighed on buyer demand and advertised supply levels trended higher.
Three of the capitals recorded a decline in values over the year; Melbourne (-3.0%), Hobart (-0.6%) and the ACT (-0.4%).
At the other end of the spectrum were the mid -sized capitals, with Perth values surging 19.1% higher over the year, Adelaide up 13.1% and Brisbane values 11.2% higher.
CoreLogic’s Home Value Index (HVI) ended the year on a negative note, with values down -0.1% nationally over the month after peaking in October and holding flat in November.
The December decline in the national HVI was enough to drag the quarterly change into negative territory, also down -0.1%, to mark the end of what has been a surprisingly strong and resilient period of growth between February 2023 and October 2024 – a period characterised by high interest rates, cost of living pressures and reduced borrowing capacity.
This result represents the housing market catching up with the reality of market dynamics.
Growth in housing values has been consistently weakening through the second half of the year, as affordability constraints weighed on buyer demand and advertised supply levels trended higher.
The first half of 2024 saw national home values rise 4.1%, before slowing to just 0.7% through the second half of the year, with five of the eight capitals recording a decline in values between July and December.
In annual terms, Australian home values were up 4.9% in 2024, adding approximately $38,000 to the median value of a home.
| City | Month | Quarter | Annual | Total return | Median value |
|---|---|---|---|---|---|
| Sydney | -0.6% | -1.4% | 2.3% | 5.5% | $1,191,955 |
| Melbourne | -0.7% | -1.8% | -3.0% | 0.7% | $774,093 |
| Brisbane | 0.5% | 1.3% | 11.2% | 15.6% | $890,746 |
| Adelaide | 0.6% | 2.8% | 14.0% | 18.4% | $813,016 |
| Perth | 0.7% | 1.9% | 19.1% | 24.5% | $808,090 |
| Hobart | -0.5% | 0.0% | -0.6% | 3.7% | $651,043 |
| Darwin | 0.4% | 0.6% | 0.8% | 7.4% | $496,871 |
| Canberra | 0.5% | -0.3% | -0.4% | 3.8% | $844,277 |
| Combined capitals | -0.2% | -0.5% | 4.5% | 8.3% | $896,372 |
| Combined regional | 0.2% | 1.0% | 6.0% | 10.6% | $657,652 |
| National | -0.1% | -0.1% | 4.9% | 8.9% | $814,837 |
Source: Corelogic HVI 2nd January 2025.
Three of the capitals recorded a decline in values over the year; Melbourne (-3.0%), Hobart (-0.6%) and the ACT (-0.4%).
At the other end of the spectrum were the mid -sized capitals, with Perth values surging 19.1% higher over the year, Adelaide up 13.1% and Brisbane values 11.2% higher.
Although the mid-sized capitals recorded double-digit annual growth in 2024, it is clear these markets have passed their peak rate of growth. The rolling annual change in Perth has eased from a cyclical peak of 24.7% over the year ending July, Adelaide’s 12-month trend has slowed from 14.6% in August, and Brisbane’s annual gains peaked in April at 17.0%.
December also marked a change in the quarterly capital city rankings, with Adelaide overtaking Perth as the strongest market with values up 2.1% in the December quarter, compared with a 1.9% rise in Perth values and a 1.3% increase in Brisbane.
Extremely low advertised stock levels have continued to support strong growth conditions across Adelaide, with stock levels tracking -34% below the previous five-year average in mid-December.
Perth, on the other hand, has seen a clear lift in advertised supply, which has provided buyers with more choice and less urgency, supporting a sharper slowdown in value growth relative to Adelaide.
The most affordable quartile of the capital city markets has shown the highest rates of value growth in 2024.
Across the combined capitals, housing values in the lower quartile of the market were up 9.8% in 2024, while upper quartile values rose by only 1.5%.
With worsening affordability constraints and reduced borrowing capacity, we have seen buyer demand pushed towards lower priced markets, which has, in turn, supported stronger growth conditions in these areas.
Regional housing markets finished the year on a stronger note
...with values up 6.0% over the year, compared with a 4.5% rise across the combined capital index.
Like the capital cities, regional value growth was dominated by the regional areas of WA (+16.1%), SA (+12.5%) and Qld (+10.5%).
At the other end of the spectrum, regional Victoria and the NT were the only ‘rest of state’ markets to record a decline in values through 2024, down -2.7% and -4.7%, respectively.
Source: Corelogic HVI 2nd January 2025.
The final months of 2024 have set the framework for a soft start to 2025.
However, as with 2024, we could likely see another year of multi-speed conditions, with the potential for a modest rebound in value growth once interest rates start coming down.
The key trends to watch in 2025 will be a reduction in the cash rate, any changes to macroprudential policies, a further slowdown in net overseas migration, an ongoing shortage of newly built housing, and some potential improvements in housing affordability.
A lower cash rate should help to bolster housing demand, but we don’t expect lower interest rates to be the catalyst for a renewed phase of strong value growth.
Financial markets (based on ASX cash rate futures) are now fully pricing in a 25-basis point cut to the cash rate by April and 77 basis points worth of cuts through the 2025 calendar year.
Rate cuts should support a further boost to consumer sentiment and will provide some welcome relief to borrowers through lower mortgage repayments and a boost to borrowing capacity.
However, it will take a lot more than three or four rate cuts to get interest rates back to the pre-pandemic decade average of 2.55%.
Any changes to macroprudential policies are likely to flow through to housing markets.
As interest rates come down, we could see APRA adjust the mortgage serviceability buffer lower, from the current setting of 3.0 percentage points, back to 2.5 percentage points.
However, there are no guarantees this will be the case.
The November statement from APRA notes the risk of financial shocks has not abated, and regulators have warned that elevated household debt levels are a key vulnerability.
We could potentially see APRA implement new macroprudential measures, such as limits on high LVR or high DTI lending if household debt levels increase further as interest rates reduce.
Source: Corelogic HVI 2nd January 2025.
- Also read:Everything you need to know about the state of Australia’s property markets in 20 charts – January 2025
- Also read:National home values record first decline in almost two years
- Also read:2024 Another Positive Year for Home Prices | Latest Housing Market Stats
- Also read:Adelaide housing market update [video] | December 2024
- Also read:Perth housing market update [video] | December 2024
Outlook
- Net overseas migration is expected to wind down further in 2025.
The annual Population Statement from the Centre for Population notes that net overseas migration peaked in the 2022-23 financial year and is set to reduce further as overseas arrivals continue to moderate before stabilising in 2025-26, alongside a pickup in departures as the surge in temporary migrant visas expires.
Less migration is likely to flow through to a further easing in rental demand, and, over the medium term, reduced demand for home purchasing.
2. The shortage of newly built housing is likely to remain a feature of the housing sector through 2025.
Delivering new housing stock that has both an acceptable price point for consumers, as well as an appropriate profit margin for builders and developers, will remain a challenge amid high construction costs and intense competition for labour and inputs from large public sector infrastructure projects.
The good news is that dwelling approvals look to have moved through a low point, and we could see more announcements from federal and state governments aimed at supporting residential construction activity.
A shortage of newly built housing is likely to support housing values until a material supply response is underway.
3.Housing to become more affordable as value growth stalls and incomes rise.
2024 saw a marked deterioration in housing affordability, with the dwelling value to income ratio equalling record highs, while mortgage serviceability and rental affordability worsened to record levels.
These metrics should show an improvement in 2025, as income growth outpaces growth in housing values, interest rates reduce, and rents stabilise or even fall.
Lower cost of living pressures should provide some additional support for housing demand and could help to keep a floor under values in 2025.
