Megan Lieu (pictured above), economic analyst at REA Group’s PropTrack, highlighted a notable slowdown in home price growth throughout 2024, culminating in a decline over the quarter ending in January.
This downturn resulted in several suburbs dropping out of the million-dollar club, reflecting a broader market cooling after years of rapid growth.
According to the January Home Price Index from PropTrack, national home prices dipped by 0.1% from December and 0.3% since October.
Among the capital cities, Melbourne and Sydney experienced the most significant quarterly price drops, with reductions of 0.9% and 1.6%, respectively.
Additionally, regional Victoria was the only non-metropolitan area to see a decline during the same period, underscoring the widespread nature of the current market adjustment.
During the property boom of 2021, an impressive 418 suburbs ascended into the million-dollar bracket. However, recent trends have seen several suburbs revert below this threshold.
Notably, Briar Hill, Dromana, and Gisborne witnessed declines of 3.6%, 1.3%, and 4%, with median house prices adjusting to $965,000, $987,500, and $960,000 respectively.
Similarly, Clarinda and Pearcedale in Melbourne, along with regional NSW suburbs like Moss Vale and Warrimoo, have seen median prices dip below $980,000. Wandana Heights and Woodend also exited the million-dollar club, with houses now typically selling around $950,000, PropTrack data showed.
The reduction in median house prices across these locations correlates with an increase in available properties for sale, contributing to the price drops.
Additionally, a softening in demand continues to pressure prices downward. Despite the past few years seeing home price growth consistently outstrip income growth – eroding housing affordability – the anticipated decrease in interest rates may soon provide some relief by enhancing buyers' borrowing capacities.
Although the market faces challenges, there is potential for recovery.
“With interest rates expected to decrease in the near term, buyers’ borrowing capacities could increase, which may reignite demand,” Lieu said.
However, any upcoming price increases are expected to occur at a more moderated pace compared to previous years, signaling a shift to more stable market conditions.
Read the PropTrack analysis here. For more information, also refer to PropTrack's January Home Price Index.
