SYDNEY (Reuters) – Australian house prices posted their first monthly drop in almost two years in December as high mortgage rates boosted availability and more sellers emerged after a long run of gains.
Data from property consultants CoreLogic, released on Thursday, showed that prices across the country fell by 0.1% in December from the previous month, while values in capital cities fell by 0.2%.
Sydney prices fell 0.6 percent in December, while Melbourne prices fell 0.7 percent. Brisbane, Perth and Adelaide continued to enjoy monthly gains.
“Property value growth steadily weakened during the second half of the year, as affordability constraints weighed on buyer demand and advertised supply levels rose,” said Tim Lawless, director of research at CoreLogic.
Property values continued to rise by 4.9% for 2024 overall, adding around A$38,000 to the median home value, which in Sydney now stands at A$1.2 million ($745,680.00).
The National Statistician estimates the value of land and housing owned by households rose by A$851 billion in the year to September, reaching a nominal A$11.3 trillion.
The market’s strength over the past few years has surprised policymakers, with interest rates hitting a 12-year high of 4.35% at the end of 2023.
The Reserve Bank of Australia (RBA) recently opened the door to a rate cut as early as February, but markets expect only a modest cut to around 3.60% during 2025.
“It will take a lot more than three or four rate cuts to get interest rates back to the pre-pandemic decade average of 2.55%,” Lawless noted.
“Thus, we do not expect lower rates to be the catalyst for a renewed phase of strong value growth.”
A Reuters poll in November forecast house prices rising by around 5% in 2025 and 2026, partly due to strong population growth and a lack of new supply.
($1 = 1.6093 Australian dollars)
