January 1st 2025.
In the past three months, the value of homes in Sydney has seen a decline for the third consecutive month. This trend was also reflected nationally, with a slight drop of 0.1% in home values during December. According to the latest data from CoreLogic, this was enough to bring the quarterly result down by the same percentage.
CoreLogic's research director Tim Lawless expressed that this decline in home values did not come as a surprise. He stated that this was simply the housing market catching up with the current market dynamics. Lawless further elaborated that the growth in housing values has consistently been on the decline in the second half of the year. This was due to affordability constraints affecting buyer demand, while the supply of advertised homes continued to rise.
This decline in home values followed a significant increase of 4.1% in the first half of 2024. Despite the results for the last quarter, Australian home values still saw an overall rise of 4.9% last year, with the median value increasing by approximately $38,000. In terms of capital cities, three saw a decline in home values over the year, including Melbourne, Hobart, and Canberra.
However, despite experiencing a decrease of 0.6% in December and 1.4% in the final quarter, Sydney's home values still managed to increase by 2.3% throughout the year, reaching an average of $1.19 million. Meanwhile, the mid-sized capitals experienced a surge in home prices, with Perth seeing a 19.1% increase, followed by Adelaide and Brisbane.
Despite these impressive numbers, CoreLogic's data suggests that the peak rate of growth for these cities may have already passed, as the rate of gains is starting to slow down. Lawless explained that Adelaide's strong growth conditions were supported by extremely low advertised stock levels, which were 34% below the five-year average in mid-December. On the other hand, Perth saw an increase in advertised supply, providing buyers with more options and resulting in a sharper decline in value growth compared to Adelaide.
Unfortunately, for those looking to enter the housing market, the most affordable homes are the ones experiencing the steepest increase in value, with a 9.8% rise in the lower-priced quartile compared to only 1.5% for the upper quartile. Lawless attributed this to worsening affordability constraints and reduced borrowing capacity, which has led to an increase in buyer demand for lower-priced homes.
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