Australia’s housing market has softened as 2024 draws to a close, with price growth slowing across major cities and turnover dipping slightly, according to Westpac’s December Housing Pulse.
Average annual price growth across the capitals has pulled back to just under 6%, compared to the stronger pace seen earlier in the year.
Matthew Hassan (pictured above), Westpac’s head of Australian macro-forecasting, noted that “while housing-related consumer sentiment suggests another leg to the upturn will form in 2025, this rests on a prospective easing in interest rates likely from the middle of the year.”
Price trends vary significantly across regions. Perth, Brisbane, and Adelaide continue to see double-digit annual growth, while Sydney’s growth is stalling and Melbourne faces modest declines. Hobart and smaller capitals also show softer price movements.
These variations largely stem from differences in affordability, supply constraints, and population growth rates. Tight supply persists in many areas, but affordability challenges are becoming more pronounced in “hot” markets, slowing demand, Westpac reported.
Despite the current slowdown, consumer sentiment around housing is improving.
The Westpac Melbourne Institute “time to buy a dwelling” index surged 21.7% over three months, reaching its highest point since early 2022.
“Consumers are sensing interest rate declines may not be too far off,” Hassan said.
Improved job security has also bolstered confidence, with the Westpac Unemployment Expectations Index showing significant improvement.
Westpac forecasts a modest 3% rise in dwelling prices for 2025, followed by stronger 7% growth in 2026. This recovery hinges on an expected easing of interest rates by mid-2025, although inflationary pressures could delay rate cuts.
For now, Australia’s housing market’s trajectory remains uncertain, but improved sentiment and a potential shift in monetary policy could reignite momentum in the coming year, Westpac reported.
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