By Michael Yardney February 6, 2025

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Property Downturn or Blip – What’s happening and Why? | Property Insiders

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Property Downturn or Blip – What’s happening and Why? | Property Insiders

Key takeaways

Most capital cities saw slight monthly declines in house values, while unit prices held up better.

The national median house price dipped just 0.2% over the January quarter—a minor shift likely linked to the holiday slowdown rather than a market downturn.

Dr. Wilson expects house prices to continue increasing in 2025, though at a more moderate pace than in 2024.

Unit approvals surged 15.2% in December, but house approvals fell 3%, highlighting the volatility of the construction sector.

Market sentiment is buoyed by the growing likelihood of an official interest rate cut.

Early indicators suggest another year of price growth, albeit at a more moderate pace than previous years.

National home prices commenced 2025 lower, with the latest data from My Housing Market reporting that most capitals recorded monthly falls for house values, although results for units were more positive.

Now before you get too worried, the national capital city median house price declined by just 0.2% over the January quarter compared to the December quarter results.

So is this just a dip in house prices related to the quieter holiday season, or is it the beginning of a market downturn?

That’s what I ask Dr Andrew Wilson Australia’s leading housing economist and chief economist of My Housing Market, in this week’s Property Insiders chat.

Property Downturn or Blip –What’s happening and Why? | Property Insiders

Watch this video on YouTube

Home prices start 2025 lower

Watch this week’s Property Insider video as Dr Andrew Wilson explains that national home prices have commenced 2025 lower, with most capitals recording monthly falls for houses, although results for units were more positive overall.

While capital city housing markets generally recorded higher house and unit prices over 2023 and 2024, they commenced 2025 with more subdued results consistent with holiday period markets and falling affordability.

The national quarterly house price has nonetheless increased over 22 of the past 24 months and is still higher by 6.7% over the year ending January 2025 and has risen by 15.9% over the past two years.

Dr. Wilson believes house prices are going to rise again in 2025, albeit at a slower pace than in 2024.

Brisbane, Perth, and Adelaide are likely to continue outperforming, while Melbourne will lag behind, awaiting a confidence boost.

Dr. Wilson believes Sydney should see steady property values gains, but affordability constraints may temper growth in the harbour city.

The long-term fundamentals remain strong, with migration, low unemployment, and potential rate cuts likely to support a moderate price rebound later in the year.

Home building approvals fall

Watch this week’s Property Insider video as Dr Andrew Wilson explains that despite home building approvals rising 3.8% over December (following a 5.3% full in November), this is not sufficient to build anywhere near enough dwellings for our needs and that there is no way we are going to reach the government's targets of 1.2 million new dwellings in the next five years.

Volatile unit approvals were up 15.2% but house approvals were down 3%.

Of course, building approvals don’t mean that dwellings will come out of the ground, and when they do they will be considerably more expensive.

As you can see from the chart below Melbourne punched above its weight in new building approvals last year as did Perth.

However, homebuilding approvals are down 35.2% since their peak in 2016.

And unit approvals are down 56.7% since their 2016 peak.

Positive start to the 2025 Auction Season

In this week’s Property Insider chat, Dr Andrew Wilson explains that the 2025 home auction season has commenced with overall positive results reflecting generally robust clearance rates from solid early-year listings over the first real week of market action.

Early signs indicate that housing markets are set for another year of growth in 2025, enhanced by the increasing prospect of an official interest rate cut.

About Michael Yardney Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.

166 comments

amayzingone 2025-02-07 16:09:24

"Property Downturn or Blip – What’s happening and Why?" Its a property market pause whilst people wait to see if interest rates are about to drop. The expected Federal election by May 2025 might extend this pause. Clearance rates are UP already in ...Read full version

1 reply

Michelle 2025-01-28 06:29:02

Hi Michael I very much agree with a quick comment you made about Potential buyers and investors responding to changes in government property in Melbourne. Policy seems to target land owners for revenue rising making property ownership in Melbour ...Read full version

1 reply

Gary Davidson 2024-12-19 00:07:54

Is there any expected easing in APRA 3% interest buffer. Or are its parameters pinch point different to RBA’s. Aren’t they same or similar, therefore should we anticipate easing in rough alignment with RBA?

1 reply

Would you like to share your thoughts?

Michelle January 28, 2025

Hi Michael
I very much agree with a quick comment you made about Potential buyers and investors responding to changes in government property in Melbourne.

Policy seems to target land owners for revenue rising making property ownership in Melbourne risky

Have you or could you provide an analysis on the cost of owning and investing inproperty in Melbourne?

1 reply Reply

Michael Yardney January 28, 2025

Michelle – there is no simple answer to your query. The cost depends on many factors, including your price point, LVR, interest rates, depreciation, tax benefits, etc.
However, they are the numbers we run for our clients at Metropole when we devise a plan for them

0 replies Reply

Gary Davidson December 19, 2024

1 reply Reply

Michael Yardney December 19, 2024

Gary, recently opera has announced that it is not planning to change serviceability buffer any time soon. – it does not do that in lockstep with the RBA cash rate

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amayzingone December 18, 2024

“Interest Rate Mystery: Just look what happened last week!”
I wouldn’t be ruling out anything right now.
Inflation has been picking up again in the US and from what I have noticed locally, insurance and grocery prices are noticeably and sizeably on the rise again. For example Home brand 1L Soy milk has jumped from $1.15 in October to $1.35 in November and suddenly up to $2.00 this week. You gotta say..WTF!!!! Ive seen many other grocery prices moving up much more than 10% lately. And lets not forget about the hundreds of dollars increase in insurances and power prices.
As a minimum I expect the RBA’s suggestion that interest rates will not fall any time soon, is correct.
Today’s so called economists have forgotten that the whole idea of raising interest rates is to dampen demand and cool the economy. Part of this is to deliberately inflict financial pain on borrowers or would be borrowers.
But as soon as this starts to happen these so called (junior) economists panick and start making calls that interest rates need to fall because people are hurting.
Its like saying to little Johnny to stop taking his medicine because he doesnt like the taste of it.
Right now I dont see much pain other than the usual people at the lower end of the socio-economic ladder who are always struggling. And unfortunately these are the same people who hurt the most from inflation.
So even if interest rates do come down in May 2025, as many are suggestiong, the scope for any rate reductions is minimal.
Expect RBA rates around 3.6%-4.00% to be the norm from now on. Anything lower is “ancient history”

1 reply Reply

Michael Yardney December 18, 2024

thanks for your detailed comment

0 replies Reply

sk November 27, 2024

DeJa’Vu .. markets are fine when these news reporters predict doom and vice versa.

1 reply Reply

Michael Yardney November 27, 2024

Well said 🤓

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amayzingone November 21, 2024

Another thing investors are targeted for is rising rents.
Those critics fail to observe that landlords do not and cannot control the market.
If a landlord increases rent beyond what is reasonable compared with other similar properties on the market, then that property will become and remain vacant, so forcing the landlord to reduce the rent and meet the market
Furthermore those same critics fail to observe that rents remained steady and even declined heavily during COVID-19 over the last 12 years. At the same time landlords faced constantly increasing council rates, water rates, land taxes, strata levies, property insurances and the cost of repairs and maintenance. Then over the last 2 years also subjected to massive increases in the interest rate of their loans.
So the net return for landlords in both percentage and dollar terms had actually significantly shrunk compared with say 2012.
This whilst everyone’s wages continued to increase over the last 12 years, even if only 2-3% pa.
At some stage rents must play catch-up with both inflation and property prices and the last 12-18 months has finally created the right environment for that to happen.
It’s all about the market finding its own equilibrium.
Governments trying to manipulate the market by restricting rent increases (but not decreases) and constantly adding more unnecessary protection for tenants just makes matters worse for most tenants.
By example, we are seeing a mass exodus of property investors from Melbourne just as we saw in QLD, when the government sought to significantly increase their land tax by including property holdings in other states in one’s property portfolio for land tax assessments.
Both State and Federal Governments fail to see the way forward to alleviate pressure on the rental market is to encourage more investment in residential housing. And we need more protection for landlords instead of tenants. After all its the landlord putting up all the money and all the risks for a measly 4 weeks bond, which amounts to nothing when tenants deliberately refuse to pay their rent during the last few weeks of their tenancy.
Enough said. I wish Governments would wake up to their short sightedness in residential property policies.

4 replies Reply

Michael Yardney November 22, 2024

Well said 🤓

0 replies Reply

Mim November 23, 2024

Totally agree with amayzingone!
Well said!

0 replies Reply

ASHLEY November 27, 2024

Well said- Tennant protection insurance will cover loss of rent for those who want to protect against that. The tenant will also run the risk of being blacklisted, so provided you do your due diligence in the choice of tenant and have this you will be okay

1 reply Reply

TooReasonable December 18, 2024

Actually, tenant protection for unpaid rent only kicks in AFTER 4 weeks (because the insurance company says you have a bond you can use to cover those first 4 weeks), and you also have to pay an excess which can be thousands of dollars depending on your policy. And if you do claim, you will see your policy amount increase by double when your next renewal comes around. Add this to the fact that if your tenant is of the caliber that they stop paying rent, you’ll likely see damage to your property that they will not fix and oh ‘use your bond’ you say. Well that bond has gone towards the unpaid rent (which will always be more than 4 weeks). Go to QCaT? Well say goodbye to the admin fees and then you wait at least another 6-8 weeks to even get a hearing date. Ok, then you go to the hearing (all the while having gone SIGNIFICANTLY backwards in your ability to service your high interest loan), and the bleeding heart ‘judge’ says the tenant hasn’t even bothered to turn up and they’ll need to reschedule. Wait another few weeks and the tenant says they were sick and their dog died and they have mental health issues and they can’t pay rent but have nowhere to go and voila! Now you are a charity and you can do nothing about it for months and sometimes years. So no, even with due diligence and ‘rent protection’ insurance, you are NOT OKAY.

It’s absolutely disgusting what we’re doing to good, honest, hardworking landlords.

0 replies Reply

MrLefty November 20, 2024

People are unable to buy a home BECAUSE of property investors pushing up prices. Property investors are the main cause of the crisis, not the solution. The other remain cause is governments not building enough public housing – because they’re spending that money on tax breaks for investors!

5 replies Reply

Michael Yardney November 20, 2024

Thanks for watching our video and your comments

0 replies Reply

Don November 20, 2024

The problem is lack of supply. Investors play a big role in providing housing. The government cannot and will not provide enough housing to fill the gap. Also, most investment properties are positively geared (mine are) and as such the investors are paying taxes not getting tax breaks. All investment properties eventually become positively geared and hence are paying tax not receiving tax breaks. Part of the solution is governments building more public housing, but the majority of the needed supply will be with investors. Many of the recent changes to rules making it harder for landlords is a big part of the problem we have now. We have discouraged investors and hence the shortage.

1 reply Reply

Michael Yardney November 20, 2024

Well said Don

0 replies Reply

amayzingone November 21, 2024

Home buyers and property investors happily compete in the same marketplace.
You dont see one shouting down another at auctions or at any property sale.
What Mr lefty fails to observe is that home buyers benefit both from state government tax breaks (stamp duty for example) and also the fact that home owners do not pay any tax on the sale of thier home. Banks also offer home owner occupiers a lower interest rate.
This all helps to level the paying field somewhat.
But even if you removed all those property investors from the market which Mr leftie obviously despises, there would be no private rentals available for Mr leftie to rent. And still no way for renters to afford to purchase a property. And many renters prefer the easier, more fluid lifestyle of renting a property where they actually want to live, rather than where they can affor. These renters would rather spend thier hard earnt money on a better lifestyle and holidays, rather than struggling to pay off a hone loan. So you would make it more difficult for EVERYONE Mr leftie.

1 reply Reply

Michael Yardney November 22, 2024

thanks for your detailed comment

0 replies Reply

MW September 18, 2024

Lots of people say higher education is an export and international students make Australia money but apart from Chinese students, they are coming here to study and work, with remittances rising and falling as student numbers do and the net flow of money being out of Australia. So while they are keeping our universities running, its with money from the Australian economy.

1 reply Reply

Michael Yardney September 19, 2024

thanks for you comment Matthew

0 replies Reply

amayzingone September 12, 2024

Headline: “Are higher interest rates smashing the economy’?”
This is a great article. It adds a lot of clarity to what is really happening in the economy.
Bottom line: The property market is easily the best barometer for the economy.
And this article confirms what I have been saying all along.
1. The RBA is simply doing its job. The government is not. In fact this high spending Labor Government and its high immigration policy is contributing to the inflation fire so making it more difficult for the RBA to bring down inflation. The RBA has been warning about this all along. Yes even the previous Governor – Philip Lowe was pointing this out. Chalmers ended his tenure because of this but it doesnt change the facts.
2. New home loans up. Property prices up. Increasing investor activity in the property market. All these show a health economy.
3. Its obvious Jim Chalmers went to the WRONG school of Economics. In order to bring inflation DOWN you must bring the economy down. Not just slow it down a bit, but slow it down a lot. You dont bring inflation down by massively increasing government spending as Chalmers has done. SCORE: RBA: Pass. Chalmers: Fail
So Jim Chalmers is simply playing politics when he attacks the Reserve bank and the RBA Governer that he personally approinted. Hohumm!
And no, the RBA is not smashing the economy (yet) which is why it is considering yet another rate increase.
Meanwhile Chalmers keeps adding fuel to the fire and rightfully claiming that the current low growth can be crerdited to Labor’s massive increases in Government spending. And all that off-budget spending isnt event taken into account in the budget!
NOTE: Inflation is actually much higher than the current reported figures due to temporary government rebates “artificially” reducing some costs. The RBA Governor said the RBA can see straight through this.
Even the public can see straight through Labor’s lies, deception tactics and false inflation fibures. They have much more trust in the RBA than the politics of Government. Thats why the polls show Albanese’s and Labor’s support is crashing!

1 reply Reply

Michael Yardney September 12, 2024

amayzingone, thanks for your detailed comment.

0 replies Reply

amayzingone September 4, 2024

QUOTE FROM ARTICLE: “Up until recently, the market lacked certainty on the direction of interest rates, but the latest inflation numbers show that interest rates are likely to be cut this month, in September.”
REPLY: Only fools think they know better than the RBA what its next move will be. The RBA Governor has made it clear there will be not rate cust this year and well into next year.
CONCLUSION: This author is simply looking for “attention” and so providing false hope for those mortgage holders hoping for a rate cut.

4 replies Reply

Michael Yardney September 4, 2024

Thanks for regularly leaving comments. I’m sorry I disagree with you this time.
Do you remember how only a couple of years ago the governor of the RBA said that interest rates would not increase until 2024?
Even though clever people at the RBA have to keep changing their forecasts

3 replies Reply

amayzingone September 12, 2024

Correct. Phillip Lowe got it massively wrong,. But the US Fed was saying the same thing.
Bottom line: Its not the RBA’s job to predict future interest rate moves.
This is what drew so much criticism to RBA Governor Phillip Lowe and he acknowledged his mistake several times.
But on timing of interest rate moves, the RBA has been close to the mark most of the time and this is what the focus should be.
Not a once-off remark by Phillip Lowe.
And I think RBA Governor Bullock is doing her best to provide some near term guidence whilst clarifying thier position and reasons for thier decisions.
On that I give the RBA 100%
I still maintain my concluding comment:
CONCLUSION: This author is simply looking for “attention” and so providing false hope for those mortgage holders hoping for a rate cut.

0 replies Reply

amayzingone December 18, 2024

Hey MY. So far my prediction and that of the RBA is proving to be 100% correct my friend.

1 reply Reply

Michael Yardney December 18, 2024

Well done 🤓

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amayzingone August 22, 2024

We have now entered the RBA’s worst nightmare – the one they thought and hoped we had avoided – wage push inflation.
We now have low unemployment, record high participation rate, record numbers of Australians in employment and unions pushing hard every day with big wage increases.
So much so that there is a news story every night that another union or group of employees has been granted an above inflation wage increase.
Worse still, the Federal Labor government is starting to suppliment private sector workers wages with tax payers money…. Seriously? What on earth have we come to?
However Politicians and their staff are by far the worst offenders….
The Federal and State Labor governments who are in bed and beholdened by the Trade Unions, have granted themselves the biggest ever pay increases.
Victorian public servants are even getting a once off $5,600 lump sum cost of living payment, Thats even if they are no longer working with the public service…..really?
And all these wage increases happening without any productivity increases.
These are all signs that wage push inflation is now absolutely rampant and out of control.
This is now a new chapter in the RBA’s fight against inflation and its only just started.
This is one of several reasons why the RBA is flagging a possible INCREASE in interest rates in the immediate future and that any decrease is OFF the table until late 2025 and possibly even as far back as 2027.
But then you have all these “Junior Economists” betting against the RBA, suggesting a rate decrease will occur by Christmas 2024 – yes thats later this year!
The situation is getting ridiculous. The house of cards is stakes very high and about to collapse.
This Federal Labor Government needs to pull its horns in, cut back drastically on public spending, cease all wage increases under its control and pull all the unions back into line.
But when you have a Labor Government in control of Australia, none of these important calls to action to pull back inflation, are in their DNA. All they know to do is SPEND, SPEND, SPEND.
And that is exactly what the RBA is trying to curtail.

Property Downturn or Blip – What’s happening and Why? | Property Insiders

Home prices start 2025 lower

Home building approvals fall

Positive start to the 2025 Auction Season

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