Home Australia Australia finally recovering from house price bloodbath with buyers tipped to receive some relief in 2025

Australia finally recovering from house price bloodbath with buyers tipped to receive some relief in 2025

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The autumn selling season could be the best time for prospective homeowners to get a foot on the property ladder as house prices reach peak affordability (pictured, an aerial view of Brisbane)

A significant decline in housing price increases has not prevented the market from extending its growth streak to eight consecutive quarters.

The fall selling season could be the best time for prospective homeowners to get a foot on the real estate ladder as home prices reach their peak affordability.

Annual property price increases have slowed to their lowest levels in Australia since September 2023 as affordability pressures and limited borrowing power take their toll on demand, property price report shows Domain housing for the December quarter.

Lower clearance rates and greater numbers of listings were giving buyers more choice and helping to take the urgency out of their purchasing decisions, Domain’s head of research and economics Nicola Powell said.

“We are seeing a rapid slowdown in almost all of our capital cities,” he told AAP.

“We have stable prices, some cities are declining and those that are going up are not going up as fast as before.”

Housing prices in capital cities grew by 1.1 percent during the last three months of 2024, slower than the average in recent years, but maintaining the markets’ positive growth streak of eight consecutive quarters.

Sydney, the country’s most expensive property market, was the only capital to decline, with median house prices falling by $1,300 during the quarter.

The autumn selling season could be the best time for prospective homeowners to get a foot on the property ladder as house prices reach peak affordability (pictured, an aerial view of Brisbane)

Powell said another factor contributing to slower growth could be buyers holding off on purchases until the Reserve Bank of Australia cuts interest rates sometime in 2025.

She expects the market to continue to weaken into the fall selling season before rate cuts, expected to begin in February or May, spur a surge in demand starting in the second half of the year.

“I think it will still help influence some purchasing decisions and put some demand back into the market,” he said.

“We may see slightly improved (selling) conditions once the spring 2025 sales season arrives in the latter part of this year.”

Although 2025 will be the best year for buyers in a long time, home ownership will still be out of reach for many.

Due to huge price growth in 2024, Adelaide and Perth are set to surpass the $1 million median house price mark, as cities emerging from a lower base make up ground against the heavyweights traditional.

While lower expected net migration will help moderate demand and new supply is expected to begin slowly flowing into the market, it will take a few years before those structural affordability issues are fully resolved.

Relatively greater supply has helped Melbourne buck the trend in recent years.

House prices in capital cities grew by 1.1 percent during the last three months of 2024, slower than the average in recent years (pictured, an auction in Melbourne).

House prices in capital cities grew by 1.1 percent during the last three months of 2024, slower than the average in recent years (pictured, an auction in Melbourne).

House prices in the Victorian capital fell one per cent in 2024, helped by state government land tax changes that have spooked some investors and opened the door to first home buyers looking to get into the market.

The state leads the country in terms of the share of financing going to first-home buyers, but Dr Powell says a lack of investor interest could hurt renters in the long term.

“The downside is that the rental market is still very tight,” he said.

‘While there are some tenants who have obviously transitioned to first-home buyers, it hasn’t been enough to balance Melbourne’s rental market.

“So newcomers to Melbourne will see what is still largely a landlord market.”

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