The Australian housing market showcased unexpected strength in 2024 but began losing momentum towards year-end as demand softened and supply increased.
CoreLogic’s annual Best of the Best Report highlighted these shifts, noting an 8% rise in total home sales from the previous year. Nationally, home sales totaled 528,000, a 6% increase above the five-year average.
CoreLogic head of research Eliza Owen (pictured above) described 2024 as a year of “variability,” where growth diverged across markets.
The Australian housing market’s “initial strength gradually waned due to declining demand, rising levels of advertised supply, and a shifting outlook for inflation and interest rates,” Owen said.
While national home values rose 5.5%, a stark contrast emerged between Perth’s 21% rise and Melbourne’s 2.3% decline. Regional markets mirrored this disparity, with Western Australia’s regions climbing 15.5%, while Victoria’s values fell 2.7%.
Amidst high interest rates, buyers gravitated to more affordable housing segments.
CoreLogic’s data showed the bottom quartile of home values rose by 10.3% in the 12 months to November, far outpacing the middle (7.2%) and upper quartile (3.0%). Perth’s suburbs dominated the top growth house markets, with all suburbs recording gains above 30%.
Owen noted that as affordability pushes buyers to lower-value markets, demand may eventually drive prices upward.
“The wealthy, high-deposit buyer pool may thin out the longer the cash rate remains at 4.35%,” she said.
The year’s top 10 property sales skewed towards Sydney’s Eastern Suburbs, including Point Piper and Bellevue Hill, as well as Melbourne’s Toorak and Queensland’s Noosa Heads.
Sydney’s Mosman recorded the highest total sales value at $1.652 billion, while Bellevue Hill retained its crown as the priciest suburb, with a median house value nearing $10 million.
Across regional markets, WA’s Beachlands led house value growth with a 38.4% rise, while QLD’s Dolphin Heads saw unit values surge by 52.8%.
In capital cities, Brisbane, Adelaide, and Perth delivered the largest gains in unit values, with Perth’s Armadale climbing an impressive 45.6%, CoreLogic reported.
Despite continued rental strain, annual rent growth slowed to 5.3% in 2024, down from 8.1% the year prior.
WA’s Geraldton saw the strongest unit rent gains (21.5%), while Noosa Heads topped house rent growth at 23.7%. Perth suburbs featured prominently, leading both house and unit rental markets.
Looking ahead, CoreLogic expects buyer demand to remain subdued in early 2025, with potential home value declines.
However, Owen suggests a turning point could come mid-year as interest rates fall.
“Analysts anticipate a shallow rate-cutting path, with forecasts placing the cash rate between 3.1% and 3.6% by late 2025,” she said.
Affordability will remain a challenge. CoreLogic estimates that for a median income household, an affordable purchase price under current rates is around $507,000 – well below the national median of $813,000. Even with a projected rate cut, affordability only rises marginally.
Despite headwinds, Owen noted some bright spots: wages growth remains above pre-pandemic averages, and easing inflation could bolster real household income in 2025.
However, market diversity will persist, with Perth and Adelaide’s rapid growth potentially slowing, while Melbourne and Hobart may experience modest rebounds.
With ongoing affordability challenges, slowing rent growth, and the potential for rate cuts in 2025, the Australian housing market remains in a state of transition. For detailed suburb-by-suburb insights, CoreLogic’s full Best of the Best Report is available at corelogic.com.au.
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