Crippling living costs, weakening economic conditions and mounting home buyer fatigue have finally broken a two year streak of national growth in home prices.
PropTrack’s latest Home Price Index showed national home values fell for the first time in two years over December, with the average home losing 0.17 per cent of its value.
Falls were larger in capital cities, where home values were reported to be an average of 0.35 per cent below the level they were in October 2024 – the last peak in capital city prices.
PropTrack economist Anne Flaherty attributed the market slowdown to an increase in property listings, which eased pressure on buyers to bid up prices.
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Buyer demand has been declining from the heights of early 2024. Picture: Max Mason-Hubers
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“The number of properties for sale has been relatively high over the second half of 2024, particularly compared to the same period in 2023,” Ms Flaherty said.
“This has given buyers more choice and we’re seeing them take more time when purchasing.”
Ms Flaherty added that a weakening economy was beginning to drag the property market.
“While the impact of stage 3 tax cuts which took effect in July bolstered borrowing capacities for some buyers, this has been counteracted by softer economic conditions,” she said.
“In particular, interest rate cuts that were originally anticipated prior to 2025 have now been pushed back.”
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PropTrack economist Anne Flaherty said higher stock levels moderated the market.
National and capital city averages obscured a large gap in price movements across individual markets.
Melbourne (-0.53 per cent), Canberra (-0.61 per cent) and Sydney (-0.29 per cent) recorded the largest falls in prices over the month.
Brisbane values inched down 0.04 per cent while Adelaide prices dropped 0.18 per cent – the first time both markets recorded citywide price declines since 2022.
Perth was the only major capital where home values increased over the month. Perth prices climbed 0.39 per cent and were up 17.6 per cent across the 2024 calendar year.
“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,” Ms Flaherty said.
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“While December was the first month in which national home values declined in two years, price growth momentum had been slowing since March 2024.
“This slowdown has been seen across both capital city and regional areas, with outperforming markets such as Greater Perth also experiencing this trend.”
PropTrack indicated that Melbourne, Canberra, Darwin and Hobart prices remain lower than they were just before the Reserve Bank made the first of 13 interest rate hikes in 2022.
There was a similar trend in regional Victoria – prices have yet to recover to the levels seen before the rate hikes.
Modelling by SQM Research predicted that prices would continue to fall in most areas until the Reserve Bank announced an interest-rate cut – now widely expected by lenders to come in the middle of the year.
The research firm added that price could drop by larger margins if rates were kept on hold for the entirety of the year.
