National home prices were down in December as values fell for the first time in two years.
The median price of an Australian home fell by 0.17% in December, the first monthly decline seen since December 2022.
Capital cities have driven the decline, with prices down in every city bar Perth and Hobart. Regional areas, in contrast, have held steady.
Key findings from the December 2024 report:
•National home prices fell by 0.17% during the month, though remain 4.73% higher compared with 12 months ago.
•Capital city areas led the decline, falling by 0.25% over December. Regional areas displayed more resilience, rising by 0.03%.
•Canberra (-0.61%) and Melbourne (-0.53%) saw the sharpest drops in prices, with prices also down in Sydney (-0.29%), Brisbane (-0.04%), Adelaide (-0.18%) and Darwin (-0.25%).
•Perth (+0.39%) has continued its run as the best performing state, while Hobart (+0.03%) held relatively steady.
•Prices across most of Australia’s regions were relatively stable in December, with the exceptions of regional South Australia (+0.60%) and regional Western Australia (-0.19%).
Home prices up 4.7% from a year ago, despite a December drop
Australian home prices fell by 0.17% in December following 23 months of consecutive price rises. After reaching a new record high in November, the national median home price dipped by $5,000 to $795,000 in December.
Prices were down in six of the eight capital cities in December, with the largest falls seen in Canberra and Melbourne. Perth bucked the trend of home price falls, rising by 0.39% over the month.
Contributing to the decrease in home prices in December has been less competitive buying conditions, with the total number of homes for sale elevated for the time of year.
Despite the monthly drop, home prices remain well up from a year ago, with values sitting 4.73% higher. Compared to March 2020, national home values are 45.1% higher.
Perth (+0.39%) and Hobart (+0.03%) were the only capital cities to see prices rise in December, with Perth the only city to see home prices reach a new record high.
Perth has been the best performing capital city in the past 12 months, with prices up 17.59%. Adelaide and Brisbane follow, with home prices up 13.53% and 11.35% in the past year, respectively.
Sydney’s home price growth has been more moderate, up just 3.43% compared with 12 months ago, despite a drop of 0.29% in December.
On the other end of the spectrum are Canberra (-0.61%) and Melbourne (-0.53%), which recorded the largest price drops during the month. Compared with 12 months ago, home prices in Canberra are up 0.45%, while Melbourne’s prices are down 2.49%
Melbourne has been Australia’s weakest performing capital city for home-price growth since March 2020, with prices up just 13.9% compared with the combined capital city average of 40.2%.
Melbourne is now the fifth most expensive capital city, having recently been surpassed by Adelaide. What’s more, Melbourne is on track to see its median home price surpassed by Perth in 2025, meaning the city will be the third most affordable in Australia, behind only Hobart and Darwin.
Several factors have led to the underperformance of Melbourne. First, in recent years Victoria has been relatively more successful at building more homes, leading to less severe undersupply issues, particularly in comparison with other capitals.
Second has been the continuing exodus of property investors in Victoria due to significant tax deterrents. This exodus has driven up the number of homes hitting the market, providing buyers with more choice and less competitive conditions.
Despite the current state of the market, however, Victoria is once again Australia’s fastest growing state, and a slowdown in new home construction is likely to lead to less favourable buying conditions in the coming years.
Regional areas continued to outperform capital cities in December
In contrast to the combined capital city areas which saw home prices down 0.25% during the month, regional home prices remained relatively unchanged, rising by 0.03%. Regional areas have also outperformed year-on-year, rising 5.12% versus 4.59% in the cities.
While the surge in regional living seen during the pandemic has long since tapered off, net intrastate migration away from capital cities to regional areas continues, driving demand for regional housing. At the same time, new home construction in many regions is failing to keep up, leading to increased competition and higher prices for many of the homes that do hit the market.
Home prices in Australia’s regions hit a new peak in December, with record highs seen in Queensland, South Australia, and Tasmania.
Regional South Australia was the best performing market in December, with median home prices rising 0.60%. It has likewise been the best performing regional area in the past 12 months, with prices up 13.03%. Despite the strong growth, it remains the second most affordable regional housing market, with a median of $467,000, behind only regional Northern Territory at $408,000.
Compared with 12 months ago, home prices are up in every regional market bar Victoria. Following South Australia, regional Western Australia and Queensland were the next best performing markets, with median home prices up 12.97% and 10.52% year-on-year, respectively.
Home-price movement was more moderate in the remaining regions, with regional New South Wales recording annual growth of 3.52%, regional Tasmania up 3.50%, and regional Northern Territory up 0.84%.
House and unit prices move at a similar pace in December
Both houses and units saw their respective national medians fall by 0.17% in December, to reach $868,000 and $653,000, respectively.
Compared with 12 months ago, houses and units have moved at a similar speed, with houses slightly outperforming seeing growth of 4.8%, compared with units at 4.6%.
The outperformance of houses versus units has not been seen in all markets, however, with unit-price growth over the past 12 months outpacing houses in Melbourne, regional Victoria, Brisbane, and Perth.
Perth was the strongest performing market for both houses and units, up 18.8% and 17.5%, respectively. Brisbane followed for unit price growth, up 15.4% year-on-year, while Adelaide followed for house price growth, at 13.6%.
Queensland and Western Australia dominate highest growth regions
The best performing regions for home-price growth over the past 12 months can primarily be found in Queensland and Western Australia, accounting for nine of the top-10 high growth markets.
In Western Australia, the best performing regions can primarily be found in Greater Perth’s more affordable areas, with the North-East coming out on top with prices up 20.5% year-on-year.
Queensland’s best performing regions, in contrast, are all located outside of Greater Brisbane, with Townsville the best performing region nationally, with annual growth of 26.3%.
Outlook
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 in the rate of growth has been seen across both capital city and regional areas, with outperforming markets such as Greater Perth also experiencing this trend.
Contributing to the slowdown – and now reversal – of price growth, the number of properties for sale has been relatively high over the second half of 2024, particularly compared to the same period in 2023.
This has given buyers more power, particularly in a market where demand has slowed and supply has increased.
While the impact of stage 3 tax cuts (which took effect from July) bolstered borrowing capacities for some buyers, this has been counteracted by softer economic conditions. In particular, the expectation at the start of the year that interest rates would be cut in 2024 has now been pushed back to 2025.
2024 has seen some of the most variable conditions across Australia, with double-digit price growth in markets such as Perth, Adelaide, and Brisbane contrasting when negative growth in Melbourne and Darwin.
This disparity in market conditions is expected to continue in 2025, though with price growth tapering in most markets, divergences are likely to be less extreme.
* The PropTrack Home Price Index measures the monthly change in residential property prices across Australia to provide a current view on property market performance and trends. PropTrack Home Price Index uses a hybrid methodology combining repeat sales with hedonic regression. The repeat sales method matches resales of the same property while the hedonic regression estimates values based on the value of similar properties. The hybrid model allows two properties in the same Australian Bureau of Statistics Statistical Area 1 (SA1) region, of the same type, to be matched and controls for differences in property characteristics, as in a hedonic regression. The PropTrack Home Price Index is a revisionary index with the whole back history updated monthly with current transaction information.
** This report uses realestate.com.au internal data and data sourced from third parties, including State government agencies. It is current as at the time of publication. This report provides general information only and is not intended to constitute any advice and should not be relied upon as doing so. If you wish to cite or refer to this report (or any findings or data contained in it) in any publication, please refer to the report as the ’PropTrack Home Price Index Report – December 2024’. See report for Copyright and Legal Disclaimers.
